The Government has announced a significant change to inheritance tax rules affecting farmers and business owners.
From April 2026, the threshold for Agricultural Property Relief (APR) and Business Property Relief (BPR) will rise from £1 million to £2.5 million per person.
What’s changing?
- New limit: Full relief will apply to qualifying agricultural and business assets up to £2.5 million
- Couples benefit: With transferable allowances, couples can pass on up to £5 million tax-free
- Above the threshold: Assets exceeding £2.5 million will still attract 50% relief, reducing the overall tax burden
Why it matters
This increase is designed to protect family farms and businesses from large inheritance tax bills, helping maintain continuity and avoid forced sales. The Government estimates that the number of estates impacted will halve, with most family farms unaffected by the changes.
Planning ahead
While this is positive news, proactive planning remains essential:
- Review your estate valuations
- Ensure succession plans make full use of combined allowances
- Consider how APR and BPR interact with other reliefs and nil-rate bands
- Seek professional advice for complex estates
At Dafferns, we specialise in helping clients navigate complex tax changes. If you would like to discuss how this impacts your estate or business, please contact our Private Client Tax team.
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