UK Households Face 'Sudden and Large' HMRC Bill After April Deadline
UK households are facing the prospect of a sudden and substantial bill from HMRC following a crucial deadline on April 6, according to recent warnings. Business owners are being alerted to significant changes to inheritance tax (IHT) business relief introduced by Labour Party Chancellor Rachel Reeves.
Changes to Inheritance Tax Business Relief
From April 6, the full 100 per cent relief will be restricted to the first £2.5 million of qualifying business and agricultural assets. Any assets above this threshold will receive only 50 per cent relief, marking a substantial shift in tax policy.
Lee Matthews, a senior partner in financial planning at wealth management firm Evelyn Partners, described April 6 as "a date that creates a clear deadline for planning" for business owners. He emphasised that "a sudden and unexpectedly large IHT bill, particularly where liquid assets are in short supply, could spell the end for even a successful enterprise and the jobs it provides."
Background and Government Amendments
The changes were first announced in the Autumn Budget 2024, when the Labour government revealed plans to cap the availability of 100 per cent relief for agricultural and business property from April 2026. Initially, assets eligible for 100% Agricultural Property Relief (APR) and 100% Business Property Relief (BPR) would qualify for full relief up to £1 million, with 50 per cent relief applying thereafter.
The government proposed that assets eligible for both BPR and APR would count together toward the £1 million cap. However, at Budget 2025, the government partially amended these proposals, announcing that the £1 million allowance would become transferable between spouses and civil partners, aligning with the nil-rate band and residence nil-rate band.
In a further development on December 23, 2025, the government announced the allowance would increase from £1 million to £2.5 million per estate. The government has stated that the majority of estates claiming APR and BPR will not be affected by these changes, with the measures intended to target a wealthy minority of estates.
Implications for Business Owners
The changes create several important considerations for business owners:
- Businesses with qualifying assets exceeding £2.5 million will face reduced relief on the excess amount
- The transferable allowance between spouses and civil partners provides some planning flexibility
- Business owners need to assess their asset values and plan accordingly before the April deadline
- The potential for unexpected IHT bills could impact business continuity and employment
With the April 6 deadline approaching, financial advisors are urging business owners to review their estate planning strategies and seek professional advice to navigate these significant changes to inheritance tax relief.
