Inheritance Tax Relief Increased in Welcome Change for Park Businesses
Posted on in Tax, Trusts & Succession, Parks
For many park owners, adjustments to the restriction of Inheritance Tax relief, announced in the 2025 Autumn Budget, did not go far enough to protect family businesses. In a surprising move, just weeks later, the government announced it will increase Inheritance Tax relief for qualifying businesses to £2.5m. Rachael Morley, Partner at Tozers, explains what this means in practice.
Inheritance Tax (IHT) reforms announced in 2024 were deeply unpopular among park owners and other affected sectors, in many cases removing the ability to pass businesses to the next generation without paying inheritance tax.
Many were disappointed when the 2025 Autumn Budget did not substantially reconsider these new IHT rules, despite extensive industry lobbying. While one positive change was unveiled – allowing the transfer of the then £1 million IHT relief between spouses and civil partners – this only partially addressed the issue for family-owned park businesses.
However, in an unexpected U-turn in December 2025, the government announced it would raise the cap on Business Property Relief (BPR) and Agricultural Property Relief (APR) for inheritance tax from £1 million per individual to £2.5 million.
Raising the IHT relief threshold – why this is significant
The change represents a substantial increase on the previously proposed £1 million allowance and will be welcome news for many park business owners.
From 6 April 2026, Business Property Relief (BPR) and Agricultural Property Relief (APR) will be reformed as follows:
- The allowance for 100% inheritance tax relief will increase to £2.5 million per individual for qualifying businesses
- Assets above £2.5 million will attract 50% relief
As announced in the 2025 Autumn Budget, married couples or those in a civil partnership will be able to transfer the benefit of any unused relief to the estate of their surviving spouse.
This means that, between them, a married couple or those in a civil partnership can now pass on up to £5 million of qualifying agricultural or business assets before inheritance tax is payable, in addition to existing allowances such as the nil-rate band.
What does the transferable allowance mean?
The 2025 Autumn Budget had already adjusted the transferable IHT allowance for married or civil couples.
Previously, each spouse had a £1 million relief between them (potentially £2 million combined), but the allowance had to be used on each death, or it would be lost. This meant that most couples leaving assets to each other first and then to their children would only benefit from £1 million of full relief unless they made the required arrangements in their Wills to avoid this.
The 2025 Autumn Budget amended this so that the first spouse to die will be able to transfer the benefit of any unused 100% relief to the estate of their surviving spouse or civil partner. If the 100% allowance is not used on the first death, this change will enable both spouses’ allowances to be claimed on the death of the surviving spouse or civil partner.
The December 2025 announcement builds on this, increasing this transferable threshold from £1 million to £2.5 million per person. Taken together, these two changes provide a much more generous provision for park businesses.
What did the government say about the IHT threshold change?
A CBI Economics survey highlighted how park businesses had responded to the £1 million cap on full IHT relief by pausing investment plans and reining in recruitment to mitigate the potential impact.
Having only partially addressed the issue in the 2025 Autumn Budget, the government then announced a surprise update in December 2025.
“The government has listened to concerns of the farming community and businesses about the (IHT) reforms.
Having carefully considered this feedback, the government is going further to protect more farms and businesses, while maintaining the core principle that the most valuable agricultural and business assets should not receive unlimited relief.”
A note on qualifying for Business Property Relief
While the changes are good news for many, it’s important to bear in mind that not all park businesses qualify for Business Property Relief (BPR).
HMRC makes a clear distinction between ‘trading’ and ‘investment’ businesses. To qualify for BPR, a business must be considered to be ‘wholly or mainly’ trading. HMRC will assess the overall nature of the business to determine whether income comes mainly from active business operations, including factors such as the levels of services and facilities provided to customers.
By their very nature, parks can often fall on the borderline, so it's crucial to seek full, specialist advice so you can be confident of your position when planning for IHT.
Proactive IHT planning
For many park owners, the changes, which take effect from April 2026, will reduce the immediate inheritance tax burden. However, the reforms are still complex and will require careful consideration, particularly where assets exceed the £2.5 million threshold or where wider estate planning is needed.
There are proactive steps you can take to manage your inheritance tax liability, ensuring Wills, trusts, and partnership agreements reflect multi-generational succession intentions.
How we can help
Our Tax, Trust and Succession Planning team regularly advise park owners on inheritance tax planning, succession, and estate structuring. If you would like advice on how these changes may affect you, your family or your business, please contact our team for tailored guidance.