Whilst BPR relief will be capped and reduced to 50 per cent from April 6 2026, there was no mention of an increase of the required Balfour trading ratio from 50 per cent, meaning that 50 per cent BPR relief can still be achieved when there is a wholly or mainly composite trading business.
There had been concern that the ratio would be increased, perhaps as high as 80:20 in favour of trading.
Valuation
It will be interesting to see whether the valuation of agricultural or business property is affected by the restriction of APR and BPR. We think this will be an active and evolving area, particularly if land ownership becomes more segregated to bank as much relief as possible as set out above.
There may also be other ways of reducing the agricultural value of land for IHT mitigation purposes through the use of corporate vehicles.
We are seeing an increase in the use of family investment companies in this context, and through structuring via tenancies and leases.
The future
These changes to APR and BPR are profound and, in many cases, will require a review of strategy for all business owners.
However, as the dust continues to settle, it is important to remember that there are options for structuring and ensuring that these assets can continue to be run and passed on efficiently.
The timing of robust succession planning is going to become even more important. Estate succession and retirement plans should be considered extremely carefully, as soon as possible, and of course well in advance of April 6 2026.
There are tools available to achieve succession goals and ambitions, even in times of concern and impending change.
Iwan Williams is a partner – tax, trusts and succession at Michelmores
