The UK's Autumn Budget 2024 introduced significant reforms affecting business owners, particularly changes to Agricultural Property Relief (APR) and Business Property Relief (BPR). These measures, designed to modernize the inheritance tax (IHT) system, have substantial implications for wealth transfer strategies. In this article, we highlight the most significant changes and suggest areas where a wealth manager can help you improve your finances.

The UK's Autumn Budget 2024 introduced significant reforms affecting business owners. Whilst some changes announced in Chancellor Rachel Reeves’ budget were widely expected (for example, the rise in 

 there were some other unwelcome surprises hidden between the lines. These are predominantly related to Business Relief (BPR) and your ability to pass on company shares to family or other beneficiaries, free of Inheritance Tax (IHT).

Starting in April 2026, the Agricultural Property Relief (APR) and Business Property Relief (BPR) will provide less generous tax relief for certain high-value estates. According to the 

first £1 million of combined business and agricultural assets will continue to be exempt from Inheritance Tax

 (IHT). However, for any value above this threshold, 

, resulting in an effective tax rate of 20% on the excess amount. These reforms aim to balance fairness with fiscal responsibility, ensuring that small family farms remain protected while larger estates contribute more.

 who specializes in advising shareholders of successful UK businesses, highlights that the recent budget changes effectively reversed a relief that had been in place for decades. This creates significant challenges for both entrepreneurs and family-owned businesses.

“From our experience, entrepreneurs typically hold low levels of liquid personal assets, with much of their wealth tied up within the business” ads Barral. “Previously, the ability to pass on 100% of a trading company’s shares free of inheritance tax meant that this succession issue had been largely negated. However, this will not be the case starting in April 2026”.

The impact extends to shares traded on the Alternative Investment Market (AIM), where a 50% relief will now apply, ensuring alignment with the new rules. 

 note that these measures, while preserving support for smaller operations, will likely increase the tax burden on larger estates.

Even though these reforms reflect an effort to target IHT relief more effectively- as previously larger estates benefited disproportionately from APR and BPR-, the changes are expected to encourage business owners and farmers to reassess their succession plans, especially those owning assets exceeding the new capped thresholds.

 notes that the decision to freeze inheritance tax thresholds 

, along with the recent changes to APR and BPR, could lead to increased tax liabilities for families as property and asset values rise. This situation presents a valuable opportunity for business owners to explore alternative reliefs and transfer mechanisms to optimize their tax strategies.

“Whilst 100% Business Relief continues to apply for qualifying assets valued at up to £1m, this reduces to 50% thereafter with the payment for the tax liability due in as little as six months later”, Barral points out. “If the beneficiaries of the shares are unable to readily sell the value of the inherited shareholding for cash (which from our experience is the case more often than not), they can find themselves with a large Inheritance Tax liability to settle and no means with which to pay it.”

“In the same breath, where there is more than one key shareholder or founder, it is now also more important than ever to ensure that things like cross-option agreements and shareholder protection policies are in place to deal with death or serious illness of a business partner. Failure to put in place the necessary arrangements will only compound the issue further for your beneficiaries”, he warns.

The adjustments to APR and BPR are part of a broader inheritance tax reform package. Per the UK Government's budget announcement, pensions inherited from April 2027 will become taxable under IHT rules, closing a loophole that previously allowed such transfers to be tax-free. These measures, combined with the extended freeze on thresholds, demonstrate a significant recalibration of the inheritance tax system.

Given the upcoming changes, experts recommend several strategies for mitigating potential tax impacts:

 Businesses should review which assets will qualify under the new APR and BPR criteria. A finance professional can provide business owners with an action plan to readjust their current one.

 Financial advisers hint at taking measures early to minimize exposure to the 20% IHT rate on assets above £1 million.

 The government has retained Business Asset Disposal Relief at favourable rates, which can provide additional options for tax-efficient asset transfers.

Barral adds: “Whilst these changes are not scheduled to take effect until April 2026 and are currently going through consultation to iron out the finer points, we are on a mission to ensure that founders and family business owners face this issue head-on”. He prompts business owners to discuss with their financial adviser how they can help and assess clients on this matter.

These changes signal a substantial shift in the UK’s approach to inheritance tax, designed to raise revenue while protecting smaller entities. Business owners will likely need to consider these developments carefully and should seek professional advice to adapt their estate planning strategies effectively in response.

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Changes in the UK's Autumn Budget: Key Impacts on Business Owners and Inheritance Tax

Experienced Wealth Manager, advising professionals, entrepreneurs and HNW families, on how to structure and manage their wealth to achieve their financial goals tax efficiently.

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Alan Barral

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Quilter Private Client Advisers also works alongside both Quilter Cheviot, it's sister company and award-winning discretionary fund management firm, and many professionals involved in managing clients' financial affairs, to help them deliver a comprehensive service. 

Quilter Cheviot is one of the largest discretionary investment management firms across the UK, Ireland and Channel Islands, managing bespoke investment portfolios for individuals and families for generations. Quilter Cheviot has over 36,000 clients and £25.9 billion of AUM (as at 31 March 2023).

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Poppy joined Quilter Cheviot in 2020 having spent over 13 years at Brooks Macdonald. Poppy joined Brooks Macdonald in 2006 where she had various roles, latterly as an Investment Director.

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As a discretionary investment manager, Andrew helps clients on their journey towards achieving their financial goals. He works closely with individuals, families, business owners, trustees, intermediaries, and pension schemes. Andrew enjoys finding out what is important to them and helping them understand, often complex, investment matters in a clear and simple way.

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Having commenced his investment management career with Adams & Remers solicitors in Sussex, he gained significant experience at Berry Asset Management (latterly Bordier & Cie) before helping to set-up Quartet Capital Partners in 2010, where he was Partner. Nigel joined Quilter Cheviot in early 2013.

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