Guide 6 min read

Inheritance tax changes 2026

A practical summary of the April 2026 inheritance tax changes and the steps advisers should take to protect their clients' estate plans now.

Written by

Sebastien Couplez

Technical Director

Inheritance tax has never affected more UK estates than it does today. Receipts reached £8.2 billion in 2024/25, a record high, and the OBR forecasts that figure will exceed £14 billion by 2030/31. The nil rate band has been frozen at £325,000 per person since 2009 and will remain so until 2030/31.

As property values and investment portfolios have grown, more estates have been drawn above the threshold. At the same time, three significant rule changes mean that strategies which were appropriate for clients before October 2024 may no longer provide the level of protection originally intended.

Source: HMRC Tax Receipts and National Insurance Contributions for the UK, April 2025. OBR Economic and Fiscal Outlook, Spring 2026.

What has changed

01 BR and APR

£2.5m at 100% relief
50% relief above the allowance

02 AIM shares

50% relief
Effective IHT rate of 20%

03 Defined contribution pensions

Entering the taxable estate
from April 2027

01 Business Relief allowance: in force from 6 April 2026

Previously, assets qualifying for Business Relief (BR) or Agricultural Property Relief (APR) could attract 100% relief with no upper limit. From 6 April 2026, 100% relief applies to a combined total of £2.5 million of qualifying assets per individual (£5 million for a couple). Assets above this threshold attract only 50% relief, resulting in an effective IHT rate of 20% on the excess. The allowance is shared pro-rata across BR and APR qualifying assets where a client holds both.

Where a spouse or civil partner has not used their own allowance, the allowance is transferable, giving couples a combined shelter of up to £5 million at 100% relief.

02 AIM shares: flat 50% relief from 6 April 2026

AIM shares, which previously qualified for 100% BR after a two-year holding period, now attract a flat 50% relief on the entire value of the holding. There is no access to the £2.5 million allowance. The IHT rate on AIM shares is therefore an effective 20% on the full holding value. For clients who held AIM specifically for IHT mitigation, this represents a material reduction in the protection their investment provided.

03 Defined contribution pensions: entering the taxable estate from April 2027

From 6 April 2027, most unused defined contribution pension funds will form part of the taxable estate for IHT purposes. Personal representatives will generally be responsible for reporting and paying the resulting IHT liability, working with pension scheme administrators where required. This is a fundamental change for clients who have historically left pension wealth untouched as a tax-efficient legacy planning vehicle. Estate planning arrangements that depend on pension assets remaining outside the taxable estate should be reviewed to ensure they remain appropriate under the new rules.

Where might existing estate plans warrant a closer look?

Changes to inheritance tax rules may affect assumptions underpinning existing estate-planning arrangements. The following questions highlight areas advisers may wish to consider when assessing the potential implications for their clients.

My clients hold AIM shares for IHT purposes:

What was the original purpose of the investment?
What level of IHT relief was anticipated when the investment was made?
How might the revised relief affect the client’s expected IHT exposure?
What other estate-planning arrangements are already in place?
Does the client remain comfortable with the investment strategy?

Explore an AIM planning case study:

Explore the AIM case study

My clients hold BR or APR qualifying assets above £2.5 million:

What is the combined value of qualifying Business Relief and Agricultural Property Relief assets?
How might the revised allowance affect the anticipated IHT treatment?
Are existing estate-planning arrangements based on assumptions that have changed?

My clients have significant defined contribution pension wealth:

How much unused pension wealth is expected to remain at death?
What assumptions underpin the client’s existing estate plan?
How might the April 2027 changes affect the anticipated inheritance?
Are pension death benefits being considered alongside the wider estate?
Would the client benefit from revisiting their withdrawal strategy or succession planning arrangements?

Explore a pension planning case study:

Explore the pension case study

Your clients may have an IHT planning gap they are not yet aware of

Estate planning strategies that were appropriate before October 2024 may no longer deliver the anticipated level of protection. The earlier the review takes place, the more options remain available. An alternative BR-qualifying investment may require a fresh two-year qualifying period, which means time is a material factor in how much protection a revised strategy can deliver.

Have a client situation you’d like to explore?

Speak to the Ingenious team

Common questions

Does the £2.5 million allowance apply separately to Business Relief and Agricultural Property Relief?

No. The £2.5 million allowance applies to BR and APR qualifying assets combined. Where an individual holds both, the allowance is shared pro-rata across the qualifying assets. Qualifying assets above the allowance receive 50% relief.

Does the £2.5 million Business Relief allowance apply to AIM shares?

No. Qualifying AIM shares do not have access to the £2.5 million allowance. From 6 April 2026, they receive 50% Business Relief on the full value of the holding, resulting in an effective IHT rate of 20%, subject to the circumstances of the wider estate.

What happens to the two-year qualifying period if a client changes their Business Relief investment?

Changing a BR investment can affect the qualifying period, so the position should be considered before making changes. While a new BR-qualifying investment will generally need to meet the two-year ownership requirement, there are circumstances where previous ownership can count towards that period — for example, where replacement property rules apply.

TECHNICAL TEAM

Simon Palmer

Group Technical Director

Simon Palmer

Group Technical Director

Simon.palmer@theingeniousgroup.co.uk

Simon has overall responsibility for the tax affairs of Ingenious’ managed investment funds and services and of Ingenious’ group companies. Simon previously spent 21 years with Ernst & Young, including 8 as a partner, and 5 years providing tax consultancy services. Simon started his career as a tax inspector with the Inland Revenue (now HMRC) and was a member of the Chartered Institute of Taxation.

Sebastien Couplez

Technical Director

Sebastien Couplez

Technical Director

Sebastien.Couplez@theingeniousgroup.co.uk

Sebastien has extensive experience in tax transactional advisory and compliance across Ingenious’ managed funds and services, including Estate Planning, EIS, VCT, and film partnerships. Prior to joining Ingenious, Sebastien worked as an Advisor at Ernst & Young. Sebastien holds a Chartered Accountant designation from the Institute of Chartered Accountants of Scotland and a BCom (Honours) in Finance from the University of the Witwatersrand in Johannesburg, South Africa.

Jack Ingilby

Technical Manager

Jack Ingilby

Technical Manager

jack.ingilby@theingeniousgroup.co.uk

Jack provides tax support across Ingenious’ managed funds and services, including Estate Planning, EIS, VCT, and film partnership, and is responsible for client tax reporting. Prior to joining Ingenious, Jack was at Deloitte. Jack is a member of the Chartered Institute of Taxation.

Ingenious Insights case studies

BR Planning After April 2026: Fix the AIM Gap

Manage Pension-related Inheritance Tax (IHT) Risks Using IEP Apex

Business Relief & Post-Business Self Planning

Business Relief & Power of Attorney

Ingenious Insights: more from the adviser education series

What is inheritance tax and who pays it?

A plain-English guide for advisers: how inheritance tax works, the key allowances and why more estates are affected than ever before.

What is Business Relief?

How Business Relief works, what qualifies, and what's changing from April 2026, including the new £2.5m allowance and the AIM shares change.

Inheritance tax changes 2026

A practical summary of the April 2026 inheritance tax changes and the steps advisers should take to protect their clients' estate plans now.

What does an investment in IEP provide?

An adviser's guide to what an IEP investment provides: Business Relief, optional insurance cover, a defined strategy, access to capital and Investors' Relief.

How does a Business Relief investment compare to other estate planning options?

Business Relief investments, gifts, trusts, AIM shares and life insurance for inheritance tax compared: the advantages and risks of each estate planning solution.

Business Relief and Trusts

Entry, periodic and exit charges explained for discretionary and interest in possession trusts, with worked examples and how Business Relief can help.

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About the author

Sebastien Couplez — Technical Director

Sebastien has extensive experience in tax transactional advisory and compliance across Ingenious’ managed funds and services, including Estate Planning, EIS,...

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