Major changes to agricultural property relief from April 2026
If you own agricultural or business property in the UK, or advise clients who do, it’s essential to understand the upcoming changes to inheritance tax (IHT) reliefs—specifically agricultural property relief (APR) and business property relief (BPR). These reforms, taking effect from 6 April 2026, could significantly impact how much of an estate qualifies for tax relief and how families plan for farm and business succession.
Here’s a summary of what’s changing, and what it means for landowners, farmers, and business owners.
A cap on 100% relief: the £1 million threshold
Currently, APR and BPR can each provide 100% relief from IHT on qualifying assets—often meaning no tax is paid on valuable agricultural or business property when passed on after death.
From April 2026, that’s changing. A combined cap of £1 million will be introduced for 100% IHT relief under APR and BPR. This means:
- The first £1 million of qualifying agricultural and/or business property will still receive 100% relief.
- Any qualifying property value above £1 million will only receive 50% relief.
This change will apply across the estate, not per asset or per individual. If you have both farm and business assets, they’ll be pooled together to determine how the relief is allocated.
Example:
If an estate contains £1.5 million in qualifying assets:
- £1 million would be eligible for 100% relief.
- The remaining £500,000 would get 50% relief (meaning £250,000 could be subject to IHT).
Why this matters
The government estimates around 2,000 estates per year will be affected, with roughly 500 estates claiming APR. That may seem small, but for those impacted, the difference in IHT liability could be substantial.
What’s more, these changes introduce new planning considerations—especially for those whose estates include a mix of business and agricultural assets.
APR extended to environmental land management
On a more positive note, from 6 April 2025, APR will be extended to land that’s used in environmental land management schemes, including those:
- Under agreements with public bodies (e.g., DEFRA)
- Managed by approved environmental organisations
This reflects the government’s growing emphasis on sustainability and the evolving role of rural land in meeting climate and biodiversity goals.
Relief for trusts and lifetime transfers
The £1 million limit will also apply to certain trusts and lifetime transfers, although detailed rules are still being clarified. It’s essential for trustees and estate planners to start considering how these limits will apply in complex ownership structures.
Payment flexibility for affected estates
To ease the transition, IHT bills arising from these changes can still be paid in 10 annual instalments, interest-free, in many cases. This allows families to spread the cost and potentially plan for asset sales or restructures over time.
What you should do now
Although these changes don’t take effect until 2026, early planning is key. We recommend:
- Reviewing your estate’s qualifying property under APR and BPR.
- Calculating potential exposure above the £1 million threshold.
- Seeking advice on how to structure your estate to maximise relief.
- Updating wills and trust arrangements to reflect the new relief cap.
These reforms mark a shift in the government’s approach to IHT reliefs, particularly as they relate to high-value estates. While most families claiming APR or BPR today may remain unaffected, those with larger holdings or complex structures could face significant new tax liabilities after April 2026.
If you’re unsure how these changes might affect you or your clients, get in touch with a qualified estate planner or tax adviser. Schedule your consultation with Soteria Trusts today.
