What they mean for vineyard and winery owners.
Following the Government’s changes to Inheritance Tax in 2024, which were not well received by farmers or business owners; a quiet announcement before Christmas might be a small gift. The Government has increased the limit on Inheritance Tax relief for business assets, which is set to come into effect from April 2026. The limit for 100% relief will now be £2.5m, rather than the previously announced £1m.
There is a lot of attention on these changes and their impact on farmers; however, they can affect others too, such as wineries and associated businesses.
What has changed now?
The changes relate to Business Relief and Agricultural Relief, which replace Agricultural Property Relief and Business Property Relief. Initially, the government announced that from April 2026, 100% Inheritance Tax relief for business assets will be limited to £1m. This was a drastic change for many, as previously there was no limit for 100% relief. This change meant that Inheritance Tax would be charged on many businesses, which would have a significant impact on succession plans.
However, in December 2025, the government announced that the 100% allowance would be £2.5m, allowing an individual to pass on a business worth £2.5m without Inheritance Tax. Above the £2.5m allowance, 50% relief will be available; making the effective rate of tax 20%, instead of 40%.
Another seemingly minor change means that this allowance can be passed to a surviving spouse. This allows a couple to pass on up to £5m, without complex planning being required.
These changes do not remove the potential for tax to be charged entirely; instead, it reduces the impact for some.
It is worth noting that the allowance increase also applies to trusts. Before the introduction of the limits on relief, trusts were a popular vehicle for transferring business assets between generations, allowing the Capital Gains on business assets to be deferred.
The introduction of the allowance meant that assets worth more than £1m would be subject to a lifetime Inheritance Tax charge, reducing their usefulness. Now with the newly increased limits, they are once more viable for succession planning.
What is staying the same?
Although there have been changes that will be impactful for many, Inheritance Tax remains otherwise unchanged. The main rate remains at 40%, and the Nil-Rate Band and the Residence Nil-Rate Band (RNRB) are frozen at £325,000 and £175,000 respectively. Together, these allow a couple to pass on up to £1m of non-business assets without paying any inheritance Tax.
However, if the value of your estate exceeds £2m, the RNRB is reduced. Because your estate is valued before Business Relief is given, relying on business relief and retaining a high-value estate could impact the RNRB available.
What can go wrong?
The RNRB threshold can catch out couples, where often the whole estate will be retained by the survivor after one spouse dies. This may mean being left with an estate of over £2m that was not planned for and losing some relief, particularly where the value of assets continues to increase and tax thresholds are frozen.
Another pitfall is a change in the nature of business assets. Where assets are passed to a surviving spouse, the availability of Business Relief is dependent on the assets continuing to qualify. If the business stops or the assets are sold, then Business Relief may no longer be available. This can lead to Inheritance Tax that could have been avoided with different planning.
What does it mean for you?
With the changes in the Inheritance Tax landscape, it is essential to be proactive. Wills that met your needs in the past may now leave your estate with an unexpected tax bill, and the conventional wisdom around long term tax planning may no longer be appropriate.
Each of us has different wishes and ever changing circumstances, and with the ongoing adjustments to Inheritance Tax it is crucial to be proactive with succession planning and seek expert guidance.
How Carpenter Box can help
Contact the team on 01903 234094 or visit www.carpenterbox.com to discuss how these changes may affect your vineyard, business, family, and long-term goals.
