The Government has announced a further revision to its proposed Inheritance Tax (IHT) reforms affecting Agricultural Property Relief (APR) and Business Property Relief (BPR). These changes will be of particular interest to farming families, landowners and business owners, and represent a notable softening of the original proposals.
As the Agricultural Partner here at Lambert Chapman, I am already supporting clients to understand how these changes may impact long-term succession and estate planning.
What is changing?
From 6 April 2026, a new allowance will limit the amount of qualifying agricultural and business property that can benefit from 100% APR or BPR.
- The allowance will be £2.5 million per estate, increased from the previously proposed £1 million.
- Any qualifying assets above this threshold are expected to receive 50% relief, rather than full relief.
This is a significant increase and is expected to reduce the number of estates affected by the reforms in the early years.
How the allowance works
- Individuals will have a £2.5 million allowance that refreshes every seven years
- Trusts will also have a £2.5 million allowance, refreshing every ten years
- The allowance will apply to the combined value of qualifying agricultural and business assets
Importantly, the Government has confirmed that the allowance will be:
- Available to both individuals and trusts
- Transferable between spouses and civil partners
This means couples may potentially benefit from up to £5 million of 100% APR and BPR, in addition to other inheritance tax allowances such as the nil rate band and residence nil rate band, where applicable.
When will this happen?
The changes will be introduced through an amendment to the Finance Bill 2025/26, which the Government expects to bring forward in January 2026.
What should farmers and business owners do now?
These proposals have been revised several times since their initial announcement at the Autumn Budget 2024, highlighting how fluid the policy landscape remains. However, anyone with significant farming assets, family businesses, trust structures or planned successions or lifetime gifting strategies should consider reviewing their estate and succession plans well ahead of April 2026.
I work closely with agricultural and business clients to ensure tax planning is practical, compliant and aligned with long-term family goals.
Talk to us about your taxes…
If you would like to understand how these changes could affect you, or whether your current plans remain appropriate, do get in touch.
Disclaimer
The views expressed in this article are the personal views of the Author and other professionals may express different views. They may not be the views of Lambert Chapman LLP. The material in the article cannot and should not be considered as exhaustive. Professional advice should be sought in connection with any of the issues contained in the article and the implementation of any actions.