We are now familiar with the planned introduction of a cap on the APR and BPR for individuals when making chargeable gifts of their assets in lifetime or on death. From 6 April 2026, 100% relief will be available on the first £1,000,000 of assets, with 50% relief applying to the excess.
Since that announcement in October 2024, Mercer & Hole has been active in calling for this £1,000,000 allowance to be transferable between spouses, such that any unused relief on the first death can be made available on the death of the widow(er). Meanwhile, couples have been revisiting their estate planning in order to maximise the relief where possible and where desired. This has included rebalancing asset ownership, or building discretionary trusts into their Wills for flexibility in passing a sufficient level assets to their beneficiaries.
The good news today is that the Chancellor has agreed to facilitate the transfer of any unused 100% allowance, much like the Nil Rate and Residence Nil Rate band already. This will be effective as soon as the APR/BPR restrictions come into force on 6 April 2026.
We are waiting to see the full implementation details however it is expected that this could enable a widow(er) being able to leave up to £2,000,000 of qualifying assets to their chosen recipients, free of IHT. As expected, an effective 20% IHT rate will apply to any excess value.
Other IHT gift reliefs including small gifts, annual exemption, expenditure out of income, charitable exemption and matrimonial gifts, are unchanged. Rules on Potentially Exempt Transfers are also untouched.
The basic Nil Rate Band has been frozen at £325,000 since April 2009 and today’s Budget has also extended that freeze beyond the expected 2029/30 tax period, to include 2030/31.
We recommend that any affected owners of business assets and agricultural assets revisit their lifetime plans and their Wills, and talk to Mercer & Hole for further advice.
If you have any questions about the above, please don’t hesitate to get in touch with Caroline Valentino or your usual Mercer & Hole contact.
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