Trusts and Inheritance Tax: What the 2026 BPR and APR Changes Mean for You
Back in our Spring newsletter we looked in detail at how Trusts can be used to help save on your inheritance tax bill, alongside the proposed changes to Business Property Relief (BPR) and Agricultural Property Relief (APR).
W hilst many professionals they would be changed, the details were released in July with very little revisions. So, now that further guidance has been issued, Sam Mudd, Senior Tax Adviser, takes a further look in to how the changes to BPR and APR will apply to Trusts from next year. What are the changes? To recap, from 6 April 2026, BPR and APR will both apply at 100% for up to £1 million of qualifying assets, with the reliefs dropping to 50% on anything thereafter. Where both APR and BPR assets are held, the £1million allowance will be prorated based on the asset value. waited with bated breath for further details, with hope that
What does this mean for Trusts? Trusts will largely fall into 3 categories going forward:
If assets have been settled into a number of different Trusts though, then each Trust has the potential to benefit from up to the £1 million allowance, subject to holding qualifying assets. 2. Trusts created and settled between 30 October 2004 and 5 April 2026 In some cases, it may be worthwhile settling assets into Trust before April when the new rules come into place. Because whilst there are transition rules, a transfer into Trust during this period will still qualify for 100% relief on the full value (i.e. in excess of £1 million) where the relevant conditions for BPR and APR are met. The Trust will have access to a £1 million allowance going forward but it allows for significant value to be passed into Trust and the potential utilisation of a further £1million allowance. It’s also worth bearing in mind that the transitional rules mean the Trust would only benefit from a £1 million allowance, and this would apply on the first 10 year anniversary. So, whilst the qualifying assets could therefore be put into Trust, a full review would not be available on the first 10-year anniversary.
1.
Those created before the Budget, so on or before 29 October 2024
2.
Those created between 30 October 2024 and 5 April 2026
3.
Those set up after the new rules are in place from 6 April 2026
1. Trusts created before the Budget on or before 29 October 2024 (a qualifying pre-commencement settlement) For those pre-existing Trusts set up on or before 29 October 2024 that hold qualifying assets, the £1 million allowance will apply. However, if the qualifying property was sold prior to this date, the allowance will not be available, even if the property was held historically for a number of years. And, after 5 April 2026, a Trust that’s entitled to the allowance will only be entitled to it up to the next 10 year anniversary date. Thereafter, the allowance will be capped at £1 million (subject to the value of qualifying assets).
1 0 | SCRUTTON BLAND | PRIVATE CLIENT
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