At the Autumn Budget 2024, the government announced their intention to restrict ‘the generosity of agricultural propriété relief and business property relief’. Despite public uproar, it appears that the government va proceed with reforms from April 2026 that will expose numerous estates to supplémentaires Inheritance Tax.
Currently it is possible to claim 100% business property relief (BPR) on qualifying business property, trading business and shares in an unquoted company, including shares listed on the Alternative Investment Market (AIM companies), 50% business property relief is available on a majority shareholding in a listed company and land used in a business and 100% agricultural property relief (APR) can be claimed on land occupied for the purposes of agriculture, together with appropriate buildings and farmhouses. This leaves most trading businesses, unquoted investments and farms fully exempt from Inheritance Tax.
Modifications proposées
Le taux de 100% pour les actions désignées comme “non cotées” sur les marchés d'une bourse reconnue, telle que l'AIM, sera réduit à 50%.
All other assets which qualify for the 100% rate of relief will continue to do so but the relief will be capped at the first £1 million of combined agricultural and business assets and will be reduced to 50% thereafter. Following protests by farmers, there have been some rumours that the government is considering increasing the cap to £5 million so that smaller businesses and farms would not be subject to Inheritance Tax but no changes to the proposals have been announced.
La possibilité de payer l'impôt sur les successions par tranches annuelles égales sur 10 ans sera étendue à tous les biens éligibles à l'abattement pour les biens agricoles ou les biens commerciaux, quel que soit le taux d'abattement applicable.
Quel sera l'impact sur ma succession ??
Actuellement, si vous possédez des actifs qui bénéficient de l'allègement au taux 100%, en fonction de l'étendue de vos autres actifs, votre succession peut ne pas avoir à payer de droits de succession du tout.
Par exemple, une succession composée des biens suivants :
- 1,5 million de livres sterling d'activités commerciales qualifiées
- 300 000 £ d'actions non cotées
- 200 000 £ d'autres actifs
Il n'y aura pas d'impôt sur les successions à payer car l'activité commerciale qualifiée et les actions non cotées sont couvertes par le BPR 100% et la valeur des autres actifs est inférieure au seuil de la "nil rate band" (fourchette de taux zéro).
À partir du 6 avril 2026, les mêmes actifs commerciaux ne seront plus entièrement couverts par l'allègement pour les entreprises et l'impôt sur les successions à payer sera calculé comme suit :
- Entreprise commerciale : 1 500 000 £ - (moins) l'abattement de 1 million de £ (allègement 100%) = 500 000 £ x 50% (allègement) = 250 000 £.
- Actions non cotées : 50% de 300 000 £ = 150 000 £.
- Valeur imposable de la succession : entreprise commerciale 250 000 £ + actions non cotées 150 000 £ + autres actifs 250 000 £ = Total 650 000 £.
- L'impôt sur les successions est dû sur : Succession imposable £650,000 - (moins) nil rate band (£325,000) = Total £325,000
- 40% de 325 000 £ = 130 000 £ d'impôt sur les successions.
Fiducies
Setting up a trust to hold qualifying business and agricultural assets is one solution to minimise exposure to inheritance tax. Whereas putting other assets into a trust may attract an Inheritance Tax entry charge at 20% this does not apply to qualifying business and agricultural assets that continue to benefit from 100% BPR/APR. Any capital gains tax liability due in respect of the transfer of the assts into the trust can be deferred until the assets are sold.
Any trusts set up before 30 October 2024 benefited from unlimited 100% relief if these held qualifying BPR/APR assets on creation and continue to receive unlimited 100% relief on exit charges until on or after 6 April 2026, after which the new rules and the £1 million cap will apply. This means that some trusts will become liable to Inheritance Tax every 10 years at a maximum rate of 6%. If any trustees are considering distributing qualifying assets, this should be done before 6 April 2026 to take advantage of uncapped BPR/APR.
However, the changes do not mean that trusts will cease to be a beneficial tool in reducing Inheritance Tax after April 2026. Any trusts created before 6 April 2026 remain benefiting from the uncapped BPR/APR (provided that person who created the trust survives for 7 years) and will have their own £1 million allowance that renews every 10 years. Such trusts will be liable to exit and 10-year anniversary charges, at a reduced rate of maximum 6% compared to 40% payable on death.
Consequently, estates and trusts that include qualifying business or agricultural assets now require careful consideration. Many estates and trusts that currently have no Inheritance Tax liability, may be brought into the scope of inheritance tax from April 2026. If you are concerned and wish to discuss what you can do to minimise your exposure to Inheritance Tax, our Client privé department is happy to help you.
Zyginta Urbonaite
Avocat associé
