What the New Tax Relief Changes Mean for Legacy Giving

Just before Christmas 2025, the government announced a major U-turn on inheritance tax rules for farms and businesses. From 6 April 2026, the threshold for full Agricultural Property Relief (APR) and Business Property Relief (BPR) will rise to £2.5 million per person. This is a significant shift from the £1m threshold proposed in the Autumn Budget 2024 proposals, following lobbying by farming families and rural organisations.

For legacy teams and fundraisers, this matters because it changes which farming families and business owners face inheritance tax—and may affect charitable-giving incentives of many of those donors were going to rely upon to reduce their inheritance tax bill.

What is APR and BPR?

• APR reduces inheritance tax on qualifying farm assets such as land, pasture, and farm buildings, helping families pass farms to the next generation without selling assets to pay tax.
• BPR applies to qualifying business assets, including shares in unlisted trading companies, business partnerships, and sole trader assets. Like APR, it prevents forced sales of assets or closures of businesses due to tax bills.

Both reliefs are vital for family-run enterprises

How the new rules work

Previously, farms and businesses could claim 100% APR and BPR on qualifying assets. Under the new system:

• Estates can claim 100% relief on the first £2.5 million of combined APR and BPR assets.
• Anything above that gets 50% relief, so tax applies to half the value.
• Married couples and civil partners can transfer unused allowance, giving a combined £5 million tax-free threshold.
• The £2.5 million limit applies to the combined total of APR and BPR assets – so owning both a farm and a business doesn’t double the allowance.

The government estimates that around 85% of estates claiming APR in 2026–27 will pay no additional inheritance tax. Although separate figures for BPR aren’t published, similar benefits are expected for family businesses.

What this means for charities

The good news:

The higher threshold means fewer estates will exceed the limit, simplifying administration and speeding up legacy payments. Estates that were bracing for complex valuations and potential asset sales may now fall entirely within tax-free allowances.

The challenge:

Families with estates above the nil-rate band often leave 10% of their estate to charity to reduce the inheritance tax rate from 40% to 36%. This incentive is powerful when tax bills loom. With the new increased thresholds, many estates will still owe little or no tax – removing the financial driver for charitable gifts.

For example, a family business worth £3 million might previously have faced a significant tax bill, making the 10% gift attractive. Now, with a £2.5 million threshold (or £5 million for couples), that same estate may owe little or nothing.

However, very large estates – those above £5 million – will still benefit from the 10% charitable gift rule, so opportunities do remain.

How to adapt your approach and encourage charity giving

The increase in APR and BPR thresholds does not mean farming families or business owners will stop supporting the causes they care about. Even where inheritance tax is no longer a motivating factor, many donors will continue to leave charitable gifts based on long-standing relationships, shared values and personal connection to a charity’s work.

That said, the changes do have practical implications for how charities approach legacy giving. In particular, legacy teams may wish to consider:

• Focusing on values, not tax savings. Emphasise the long-term impact of a gift, personal stories, and the donor’s connection to your cause rather than relying on inheritance tax incentives.
• Reviewing legacy materials. If your brochures, webpages or FAQs focus heavily on the 10% reduced tax rate, these may need updating to reflect the new reality—while still retaining accurate information for very large estates.
• Using tax-based messaging more strategically. The 10% charitable gift rule will remain relevant for estates above £5 million, so tax-based messaging still has a place, but it should be carefully targeted rather than used as a default.
• Staying informed. Monitor how these changes affect donor behaviour and estate planning, and be ready to support advisers with accurate, up-to-date information.

Practical next steps for legacy teams

• Review legacy literature and website content to ensure references to tax relief remain current
• Be aware of supporter groups most likely to be affected, such as farming families and business owners
• Ensure internal teams and trustees understand the changes and their implications

The increase in APR and BPR relief thresholds will be welcomed by many farming and business-owning families and should continue to simplify estate administration for estates that were expected to be affected by the limits announced in the Autumn 2024 Budget.

For charities, the focus now shifts to understanding how these changes interact with existing estate planning and ensuring that charitable gifts are administered smoothly and in line with donors’ intentions. While tax considerations may play a smaller role for some estates, legacy giving remains an important part of long-term philanthropic planning.

How we can support you

We advise charities, executors and trustees on estates involving agricultural and business assets, helping to navigate the practical application of APR and BPR under the revised rules. This includes supporting charities where estate planning was undertaken in response to earlier proposals and now requires careful interpretation following the increase in relief thresholds.

We also assist in reducing delays and uncertainty during estate administration by working closely with executors and professional advisers to clarify eligibility for reliefs and resolve issues efficiently.

By providing clear, practical legal advice, we help ensure that charitable gifts are received as intended, risks are managed appropriately, and relationships with families and advisers are handled sensitively and professionally.