Changes to Business Property Relief (BPR) for Inheritance Tax (IHT) are on the horizon, which will have big implications for some vineyards and wine makers.
What are the current rules?
At present, Business Property Relief gives 100% relief from Inheritance Tax (IHT), for qualifying business assets, with no upper limit. This means that no IHT is payable on business assets held on death, regardless of their value.
Business owners have relied on this relief to allow their businesses to be passed on tax free, making it tax efficient to keep ownership of the business until death. In addition, assets that are inherited receive a capital gains uplift, avoiding any Capital Gains Tax on the increase in value.
What is changing?
From 6th April 2026, the 100% relief will be limited to £1m, with only 50% relief above that, this means that the value of business assets above £1m will suffer IHT at 20%. For example, a vineyard with a value of £3m would face an IHT bill of £400,000.
This is a dramatic change for many businesses, whose plans were based on the previous tax relief. As a result, many business owners are being forced to consider alternative plans.
Despite challenges and protests from business owners and farmers, the government are pressing ahead with the implementation of these changes, with draft legislation being released recently.
This legislation is broadly in line with what was initially announced, and gives some further details. For example, it has now been clarified that the £1m relief limit will not be transferable like the Nil Rate Band is, instead being lost if not utilised.
What can be done?
It is important to have a clear understanding of how the changes will affect you. You should consider your existing plans and assess the value of your estate, this might mean reviewing wills and estate planning to assess the full impact.
Recent confirmation that the £1m relief limit will not be transferable on death means that changes to wills may be needed to ensure that it is used on the death of the first spouse and not lost. Historically it has been common for all assets to transfer to a spouse on the first death, and only to the next generation on the second death, but this now has the potential to result in additional IHT of £200,000 that could be avoided with proper planning.
Making transfers of assets during your lifetime can reduce the value of your estate, and so minimise the IHT payable. However, other taxes may be payable as a result of transfers, so it is crucial to ensure that all aspects have been considered.
Other options may offer benefits with less disruption, such as investing in life cover which can provide your estate with funds to settle the IHT.
How Carpenter Box can help
Early planning is key to minimising your estate’s IHT liability and passing on the maximum to the next generation. While the changes are coming into effect from 6th April 2026, some actions may need to be taken before then, particularly where trusts are being used.
Our tax specialists can help you arrange your affairs and understand what options are available to you, please do not hesitate to contact us for more information.
Please contact our vineyard team for a free initial discussion:
Sarah Fitzgerald, Partner, Vineyard Sector
sarah.fitzgerald@carpenterbox.com
Sarah is a partner in the Business Services Group advising owner managed businesses from new start-ups to established family businesses. She specialises in the viticulture sector, advising in business development and strategic planning alongside providing professional tax and accounting support.
David Rainford, Tax Manager
david.rainford@carpenterbox.com
David is a Chartered Accountant (ACA) and Chartered Tax Adviser (CTA). Working as part of the Tax Advisory team in Brighton and Worthing, David helps vineyard clients minimise their tax exposure and take the stress out of their tax returns.
