Changes to inheritance tax (IHT) rules, introduced in the latest government budget, could significantly affect equestrian businesses such as studs, riding schools, and livery yards. Owners are being urged to seek professional financial advice to navigate these changes effectively.

Overview of the New Inheritance Tax Rules

In the Government’s autumn budget, announced on 30 October, Chancellor Rachel Reeves introduced reforms to Agricultural Property Relief (APR) and Business Property Relief (BPR). Currently, individuals can claim 100% relief on qualifying agricultural land, property, and business interests, shielding them from inheritance tax.

However, starting 6 April 2026, this full relief will be capped at £1 million for combined agricultural and business properties. Any value exceeding this threshold will only qualify for 50% relief from IHT

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Impact on Equestrian Businesses

While the primary focus has been on farmers, these changes are set to affect equestrian businesses too, particularly stud owners who rely on APR.

Nicola Glass, an independent financial adviser at Integrity365, explained, “In the past, a farmer or stud owner’s beneficiaries could claim unlimited relief under APR and potentially BPR. But with this cap, assets exceeding £1 million in value will be subject to a 20% inheritance tax on the excess.”

For equestrian studs, this limit could quickly be surpassed when considering land, buildings, and other qualifying assets. Similarly, livery yards and riding schools, while not typically eligible for APR, may qualify for BPR. These businesses could face similar financial challenges under the new rules.

Example Scenario: Financial Implications for a Stud Owner

Anne Stables, the sole owner of a profitable stud farm, illustrates how these changes might play out:

This scenario underscores the importance of professional advice and strategic IHT planning.

Steps to Mitigate Inheritance Tax Liability

Ms. Glass advises equestrian business owners to take proactive measures, including:

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Advice for Business Owners

A British Horse Society spokesperson emphasized the importance of seeking professional guidance:

“The impact of these changes will depend on individual circumstances, so riding centre and livery yard owners must understand how they might be affected. Clear legal advice can help owners make informed decisions.”

Final Thoughts

These inheritance tax reforms concern farmers as well as the broader rural and equestrian community. Early action can help mitigate potential tax liabilities, ensuring the long-term sustainability of equestrian businesses. Owners should prioritize financial planning to protect their legacies and navigate the upcoming changes effectively.

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