Yet another change to IHT from April 2026

The furore around inheritance tax for business and farm owners since the Government first announced changes in Budget 2024 seems to keep rolling on. On 23 December, the Government announced yet another change by increasing the nil band for business and farming assets to £2.5m (up from £1m) per person.

This is the second major concession since the original proposals and just three months before the new rules come into force from 6 April 2026.

Paul Townson, a tax partner at BDO said: “Many of our business and farming clients have been hugely concerned about the new rules with some having been forced into changing their succession plans already. For some, that effort may now prove to have been unnecessary – assuming there aren’t even more changes to the proposals before next April.

“While the increase in the nil band is a sensible move, it’s difficult to understand why these changes have been announced in such an incremental way and within less than a month after the Budget. The stress this whole process will have caused to business owning families should not be underestimated.

“Once the new rules are finally implemented, the Government should commit to a moratorium on any further tightening of the IHT rules for at least 10 years. Then owners could have some certainty over how they can pass on their business to the next generation.” 

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Note to editors

BDO UK operates in 17 offices across the UK, employing 8,000 people. It has UK revenues of £1bn. 
 
It provides Audit, Tax, Deals, and Consulting, Risk & Outsourcing services predominantly to the entrepreneurial, ambitious and growing mid-sized businesses that are driving growth in the UK economy. BDO calls this segment of the market the UK’s economic engine. 
 
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 Frank Shepherd
Senior PR Manager BDO
frank.x.shepherd@bdo.co.uk

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