Apart from the totally predictable freezing of the inheritance tax nil rate bands, the big inheritance tax related news from the Budget of 26 November 2025 lies in an amendment to the transferability of business and agricultural property relief between spouses.
The £1m allowance for 100% Business Property Relief and Agricultural Property Relief will be rendered transferable between spouses and civil partners with effect from 6 April 2026. This brings the reliefs in line with the treatment of the existing nil rate band and residential nil rate bands.
Whilst many business owners and farmers will have hoped for much more radical backtracking on the 2024 budget, rendering the £1m allowance transferable is a welcome relaxation. Without this change, many business owners and farmers would have been forced unnecessarily into more complex planning, probably involving trusts, to ensure allowances were not inadvertently wasted on a first death.
It was also confirmed that the business and agricultural property reliefs will also transfer where an individual’s spouse or civil partner dies prior to 6 April 2026. This sensibly mirrors the transitional measures for deceased spouses when the residential nil rate band was introduced back in 2017.
A review of Wills for all affected couples is now strongly recommended
But where does the Government state this relaxation? Have a look at the ‘Policy Paper’ issued on 26 November 2025 which can be found here:
Stephen Parnham
