Summary of draft BPR and APR legislation – July 2025

On 21 July 2025, HMRC published the draft legislation for Business Property Relief (BPR) and Agricultural Property Relief (APR), introducing significant changes to how these reliefs will be applied for inheritance tax purposes. These changes are more detailed and structured than initially outlined in the Autumn Budget 2024, particularly with the formalisation of allowances and the treatment of trusts.

Key Highlights:

1. £1 Million Cap for 100% Relief:

• A new "100% relief allowance" has been introduced.
• Only the first £1 million of qualifying BPR/APR assets will receive 100% relief.
• Any value above this threshold will receive 50% relief.

2. Trusts:

• Trusts created before 30 October 2024 will have their own £1 million allowance.
• Trusts created after that date must share the allowance across all trusts from the same settlor.
• The allowance refreshes every 10 years for trusts (7 years for individuals).

3. Environmental Land:

• APR will now extend to land under environmental agreements with public bodies from April 2025.

4. Unlisted Shares:

• From April 2026, BPR for unlisted shares (e.g., AIM shares) will be reduced to 50%.

These changes represent a significant shift in inheritance tax reliefs and may have important implications for estate and succession planning. For a detailed comparison between the draft legislation and the original proposals, please refer to the tables below.

Business Property Relief (BPR)

Key Differences:

Feature	Autumn Budget 2024	Draft Legislation (July 2025)
100% Relief Cap	£1m cap proposed	£1m cap formalised via allowance (Section 124D)
Trusts	Affected, details pending	Separate trust allowance, shared if post-2024 (Sections 124E–124I)
Refresh Period	Not specified	7 years (individuals), 10 years (trusts)
Anti-Forestalling	Mentioned	Confirmed and detailed
Unlisted Shares	50% relief from 2026	Confirmed

 

Agricultural Property Relief (APR)

Key Differences:

Feature	Autumn Budget 2024	Draft Legislation (July 2025)
100% Relief Cap	£1m cap proposed	£1m cap formalised via allowance (Section 124D)
Trusts	Affected, details pending	Separate trust allowance, shared if post-2024 (Sections 124E–124I)
Refresh Period	Not specified	7 years (individuals), 10 years (trusts)
Environmental Land	Not mentioned	Included under APR from 2025

 

If you would like to discuss how these changes might affect your current arrangements, please feel free to contact a member of our farms and estates team.