From April 6, 2026, UK inheritance tax (IHT) law for businesses, including pubs, will introduce a cap on BPR of £2.5m, up from £1m as originally announced.
The relief will be limited to a combined allowance per individual for qualifying business and agricultural assets, with remaining value receiving only 50% relief.
UKH welcomed the changes, stating they would better safeguard family-run hospitality businesses, almost half (47%) of which said they were affected by changes to BPR.
Regarding the original policy, Oxfordshire-based family pub business Oak Taverns warned the company was forced to consider selling a pub to pay the tax bill instead of focusing on growth.
Positive development
Meanwhile, the Empire Hotel in Llandudno said it would ultimately have had to close, rather than pay the tax bill, and Milsom Hotels & Restaurants said the it would have resulted in job losses.
UKH also highlighted while the changes were a positive development, many firms would still face significant inheritance tax bills, urging the Government to continue engaging with the sector on further solutions.
Chair Kate Nicholls said she was pleased ministers had listened to the concerns raised by the trade body and acted.
“Family-run businesses are part of what makes much of hospitality so special, with generation after generation taking on the family pub, restaurant or hotel to continue its legacy.
Urgent change
“The original changes to Business Property Relief put all of that at risk, with businesses up and down the country suddenly facing tax bills running into tens of thousands of pounds.
“We have worked extensively with the Treasury and MPs across Parliament to highlight the unintended consequences of this policy and the impact it could have on local communities, particularly in rural and coastal areas”, she continued.
The UKH chair added while the new policy went some way to safeguarding family-run hospitality businesses, there was still more that can be done.
Nicholls also thanked UKH members for supporting the trade body by sharing their difficult and personal stories: “Those are the stories that hit home about how devastating the changes could be and why change was so urgent.”
