Following intense public pressure, the UK government has more than doubled the threshold for Inheritance Tax (IHT) relief on farming and business assets that qualify for Agricultural Property Relief (APR) and Business Property Relief (BPR).
Originally announced in the Autumn Budget 2024, the threshold for APR/BPR had been reduced to £1 million, with assets above that level becoming subject to Inheritance Tax at 20% from April 2026. However, after strong responses from farming organisations and family business groups, the Government amended the rules in December 2025.
Under the revised policy, effective April 2026:
- APR and BPR relief is available at 100% on qualifying business or agricultural property up to £2.5 million per individual, up from the previously proposed £1 million threshold.
- The allowance is individual, meaning a married couple or civil partners can shelter up to £5 million in qualifying assets between them.
- In many proposals, relief on qualifying assets above £2.5 million may be tapered – for example, 50% relief on the excess – but details should be confirmed against final statutory guidance.
Although APR and BPR have existed for decades to support family-owned farms and businesses, the Government’s 2024 reform proposals had dramatically tightened relief, raising concerns over viability and succession planning. The revised threshold significantly eases the potential tax burden on many farm estates.
Commenting on the changes, the Government estimated that the number of estates likely to pay IHT in 2026/27 under the original proposals would have been around 2,000; this is now expected to fall to approximately 1,100 under the amended thresholds, reducing projected receipts by around £130 million. Estates that still exceed the relief limits may remain liable for IHT.
What this means for farmers
For agricultural enterprises and qualifying family businesses, the uplifted APR/BPR threshold offers welcome relief for succession and estate planning. Many owners of farmland, buildings, machinery, and other business assets can now preserve more wealth for the next generation without facing excessive tax charges.
However, a significant minority of estates – particularly those with high-value land holdings or diversified operations – may still fall above the relief limits and face potential IHT exposure. This includes businesses with assets that stretch beyond £2.5m per individual, even when combining allowances.
Next steps for owners of qualifying agricultural and business property
Owners concerned about potential tax liabilities should consider professional succession and tax planning. A proactive approach can help ensure intergenerational transfer is smoother, compliant and tailored to both short- and long-term objectives.
Champion’s expert advisors can support:
- A detailed review of current succession plans
- Evaluation of ownership structures and qualifying relief eligibility
- Tailored strategies to manage potential IHT liabilities, including lifetime gifting, trusts, and family investment vehicles
- Consideration of business diversification (e.g., commercial lettings or farm shops) alongside maintaining APR/BPR eligibility
In addition to tax planning, Champion offers wider support services including restructuring, finance raising, statutory audits, loan arrangements, property transactions, land acquisitions and timing capital expenditure to optimise relief opportunities.
With the IHT landscape evolving, sound planning is essential to protect wealth, support business continuity, and ensure a secure legacy.
For more information on how Champion can help you navigate IHT planning and relief, please contact our team on 0161 703 2500 or email David.Herd@championgroup.co.uk
