14 November 2024

Following on from our summary of the Autumn Budget in the last edition of Marinetalk (30th October), we want to draw your attention to the Government’s plan to reform the Inheritance Tax (IHT) regime. Whilst the current inheritance tax thresholds, including the nil rate of £325,000, will be extended until April 2030, the Chancellor is planning to make significant reforms to Business Property Relief (BPR) and Agricultural Property Relief (APR). 

From 6 April 2026 it is anticipated that 20% inheritance tax will be charged on transfers of qualifying business property and agricultural property worth more than £1m. This is a combined cap for both reliefs. Broadly, the new tax charge will apply in three scenarios:

• On the death of an owner of such property.

• On the death of a donor of such property within seven years of an outright gift (under the well-established potentially exempt transfer (PET) regime) – this charge is levied on the recipient of the gifted property unless the donor’s Will specifies otherwise.

• On the gift into trust of such property during the lifetime of the donor/settlor.

Non-listed investments (such as AIM shares) will also only be eligible for 50% relief, so are to be taxed at 20% with no access to the capped amount as a deduction. The Government will also bring unused pension funds and death benefits payable from a pension into the scope of Inheritance Tax from 6 April 2027. Pension scheme administrators will be responsible for reporting and paying any Inheritance Tax due on unused pension funds and death benefits.

Members may be aware there is growing concern about the planned changes to BPR and APR, particularly amongst the farming community which is urging the Government to rethink.  Any such changes require legislation which has yet to be introduced in Parliament. The Government will publish a technical consultation on changes to BPR and APR in the New Year. 

We are working with British Marine’s Professional Services Association to monitor these developments, with a view to potentially providing members further advice and guidance in due course. In the meantime, please do let us know if you share these concerns regarding BPR by emailing publicaffairs@britishmarine.co.uk.    

For more information see below

Government Policy Paper on Summary of reforms to BPR and APR 

CLA -  Frequently Asked Questions on proposed changes to BPR and APR