On 21 July 2025, the government published draft legislation for the Finance Bill 2025-26. The consultation period for the draft legislation is open until 15 September 2025. This comes at a time when the government has seen borrowing surge to the second highest level on record, placing further pressure on public finances.
Despite a number of large protests by the farming community, the proposed reduction in Agriculture Property Relief (APR) and Business Property Relief (BPR) are included in the draft Finance Bill 2025-26. APR is usually used for farmland and buildings and is for the agricultural value of these. BPR has always been used for the share in the trading business and also covers the development land value or non-agricultural property value of business assets.
The legislation includes confirmation of a significant overhaul of inheritance tax (IHT) relief that was first announced in the Autumn Budget 2024 will come into effect from 6 April 2026.
The changes will mean that from 6 April 2026, APR and BPR will be limited to £1m of relief. Anything that would have qualified for APR or BPR above the £1m will be taxed on the estate at 20% rather than 40% on other assets. This change applies per individual and will not be transferrable between spouses, meaning that in an ideal situation ownership should be equalised out as much as possible.
The allowance for 100% APR and BPR will remain fixed at £1m up to and including the 2029/30 tax year. From 6 April 2030 it will be indexed in line with the Consumer Price Index.
It was also announced that the option to pay IHT by equal instalments over 10 year's interest-free will be extended to all property which is eligible for APR or BPR. It is important for individuals and trustees to understand whether this will be available to them.
Due to these changes, farm businesses now need to look at IHT planning in more detail. This announcement has prompted that sometimes we do not spend enough time looking at the business' long term plan. There are many things to think about when looking at succession planning and there is no one size fits all.
IHT Planning Steps:
1. Collate details of your estate
The first step will be to get the details of your estate together. This includes working out who owns what and how it is held, i.e. in the partnership or by an individual.
2. Get valuations
The next step would be to get valuations and work out the asset and stock values. Ask your land agent for a marketing appraisal of your land values.
Make sure these figures are realistic and do not undervalue as it will not give accurate figures to create a plan of action.
3. Contact Professionals
Once you have collated the details of your estate and have valuations, please contact us, we are able to provide IHT estimations so that we can calculate and IHT exposure. It is important to have open discussions throughout the family so that everyone is aware and on the same page, including any off-farm family members.
It might be a good idea to have a meeting with a number of advisors and professionals all at once, e.g. your accountants, financial advisors and legal advisors, so everyone is involved in the planning.
It is important to remember that each business and each person is different. It does tend to take time to look at IHT planning so starting early is a good idea - it is important not to rush things and miss a vital step. There are ways to mitigate any IHT payable and exposure due to gifting.
For more information on IHT planning for farm businesses, please contact our agricultural team on 01823 286274, or email This email address is being protected from spambots. You need JavaScript enabled to view it..
