Welcome News for Farming Families on Inheritance Tax Relief

  

Some welcome news just before the Christmas break on the changes to the Inheritance Tax (IHT) reliefs for Agricultural and Business property!

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The government has confirmed today (23rd December 2025) that the threshold for 100% Agricultural Property Relief (APR) (and Business Property Relief where relevant) will increase from £1 million to £2.5 million, effective from 6 April 2026.

 

What Has Changed

 

Under the revised rules:

• Up to £2.5 million of qualifying agricultural assets per estate will continue to benefit from 100% relief from inheritance tax.

• The allowance will be transferable between spouses or civil partners, meaning that a farming couple may pass on up to £5 million of qualifying assets free from IHT.

• Qualifying assets above £2.5 million (or a combined £5 million) will continue to attract 50% relief.

• This is a significant increase on earlier proposals and will materially reduce the number of family farms exposed to inheritance tax.

 

Why This Is Important for Farming Families

 

Rising land values have meant that many traditional family farms were at risk of falling into the inheritance tax net under the previously proposed £1 million cap. This increase provides welcome reassurance and greater certainty for long-term farm succession planning.

 

That said, inheritance tax exposure can still arise with:

• High-value land or business assets,

• Non-qualifying investments or property,

• Complex ownership or partnership structures, or

• Future business growth that may exceed the new threshold.

 

What We Recommend

 

Although the new threshold is positive news, it remains essential to review your farm succession and tax planning regularly. In light of this announcement, we recommend considering:

• Whether your current ownership and trading structure maximises APR and BPR,

• The interaction between APR and other IHT allowances,

• Wills, partnership agreements, and succession plans,

• The impact of future land value growth.

 

If you would like to discuss this further, please get in touch with your usual contact.