IHTM25580 - AR/BR 50% rate: instalment option

From 6 April 2026, the option for payment by instalments will be available for any tax due on agricultural or business property. 

FA26/Sch12/Para13 adds paragraph (aa) to IHTA84/S227(2): 

(aa) property that is relevant business property for the purposes of Chapter 1 of Part 5.  

This means that any property that is relevant business property will also be qualifying property for payment by instalments. 

Any property that is agricultural property will by definition be land or buildings, and so will be qualifying property under IHTA84/S227(2)(a) in any case. 

Payments by instalments for agricultural or business property will be interest-free in most cases see IHTM30214. 

Example 1 

Catarina dies in May 2026 and leaves agricultural property to Steve. The value of the agricultural property is £3m. As this is in excess of her 100% relief allowance, the remaining value will only be relieved at 50%. 

The tax due on the £500,000 over Catarina’s allowance can be paid by instalments, as it is qualifying property under IHTA84/S227(2)(a). 

Example 2 

In 2028, Jonny retires and gifts his trading business to Becki. This is a potentially exempt transfer.  

Jonny dies a year later, making it a chargeable transfer.  

The business is worth £4m. As the value of the business is in excess of Jonny’s 100% relief allowance, the remaining £1.5m will only qualify for relief at 50%. 

As the business is relevant business property under IHTA84/S105(1)(a), Becki may elect to pay the tax that is due on the unrelieved value of the business by instalments. 

Example 3 

Amy and Andrew both own shares in Company A, which is a trading company. Amy settles her shares in Company A into trust after 6 April 2026. Her shareholding is valued at £3m. As this is in excess of her 100% relief allowance, the remaining value will only be relieved at 50%. 

The trustees bear the tax on this transfer, and it is able to be paid by instalments, as it is qualifying property under IHTA84/S227(2)(b). 

Andrew also settles his shares in Company A into trust after 6 April 2026, but unlike Amy he gifts the shares free of Inheritance Tax. His shareholding is valued at £3m as well, so like Amy’s shareholding, it is in excess of his 100% relief allowance and the remaining value will only be relieved at 50%. 

As the tax is not borne by the trustees on this transfer, it is not qualifying property under IHTA84/S227(1)(b) and is not able to be paid by instalments. See IHTM14541.