Here are the new inheritance tax rules for the UK
The government has announced yet another revision to its planned inheritance tax changes as anger and confusion from business and farm owners continue to mount.
On Tuesday (23 December), the government announced yet another change by increasing the nil band for business and farming assets to £2.5 million (up from £1 million) 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.
The change comes after months of protests – particularly from the farming sector – which has warned that the previous threshold would leave many small farmers with an inordinate tax bill.
“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,” said Paul Townson, a tax partner at BDO.
“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, Townson said.
He added that 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.”
