Government Raises Inheritance Tax Relief Threshold for Farmers and Businesses – What It Means for You
In a significant announcement on 23 December 2025, the UK Government confirmed a major change to inheritance tax reliefs that will deliver meaningful financial benefits for many farmers, rural landowners and owners of qualifying businesses. This new measure comes into effect from 6 April 2026 and represents a substantial increase in the threshold at which Agricultural Property Relief (APR) and Business Property Relief (BPR) apply. GOV.UK
What Has Changed?
Previously, 100 per cent relief from inheritance tax on agricultural and business property was limited to assets valued up to £1 million per estate. The Government has now raised this threshold to £2.5 million per estate. This means that qualifying agricultural and business assets valued up to that level will continue to attract full relief from inheritance tax. GOV.UK
Importantly, these reliefs are transferable between spouses or civil partners, meaning that a couple can now pass on up to £5 million of qualifying agricultural or business assets tax free, before other allowances such as the nil rate band are taken into account. GOV.UK
Why This Matters
The increase in the relief threshold is a response to concerns from the farming community and rural businesses that earlier proposed changes would have imposed a significant tax burden on family farms and traditional rural enterprises. By raising the threshold to £2.5 million, the Government has ensured that the majority of family estates will remain protected from higher inheritance tax liabilities. GOV.UK
According to Government estimates, the change will halve the number of estates affected by the earlier reforms. Many families will see inheritance tax bills reduced by hundreds of thousands of pounds, and roughly 85 per cent of estates currently claiming agricultural property relief are forecast to pay no inheritance tax at all on their qualifying assets from April 2026 onwards. GOV.UK
What This Means for Farm and Rural Property Owners
For family farms and rural business owners, this announcement offers greater certainty and protection for passing on assets across generations. The rise in the APR and BPR threshold:
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Provides greater tax relief on agricultural and qualifying business land and property.
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Reduces the need for estate restructuring purely to manage inheritance tax exposure.
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Offers improved planning flexibility for families aiming to retain assets within the family business or farming enterprise.
For estates with qualifying assets above the new threshold, 50 per cent relief will continue to apply on the portion above £2.5 million. GOV.UK
Practical Considerations
If you own agricultural land, farm property, rural buildings or a qualifying business, it is vital to review your long term estate plans in light of these changes. Key considerations include:
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Estate Valuation Reviews – Updating your valuations now will provide a clear picture of how the new thresholds affect your business or farm.
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Succession Planning – The enhanced relief provides an opportunity to review how succession can be structured to maximise long term family or business continuity.
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Tax Efficiency Strategies – Working with professional advisers can help you align your assets to take full advantage of the revised reliefs and existing allowances, such as the nil rate band.
Finn’s Perspective
At Finn’s, we are monitoring this development closely and can help you understand how these changes may impact your property and estate plans. With deep experience in rural property, farm estate management and agricultural advisory work, our team is well placed to support you through review, planning, and any necessary adjustments to your property strategy ahead of April 2026.
If you would like to discuss how the new inheritance tax relief threshold affects your situation or explore planning steps that might benefit you and your family, please contact us for a detailed consultation.