On 23rd December 2025, the Government announced that the proposed changes to the zero-rate Inheritance Tax threshold for Agricultural and Business Property Reliefs (APR and BPR) will be changed from £1m to £2.5m.
Under the new rules coming into place on 6th April 2026, estates will receive 100% APR and BPR on amounts up to £2.5m, with 50% relief on amounts above. Married couples or civil partners will be able to pass on a farm worth up to £5.65m without any inheritance tax liability. This combines both £2.5m APR and BPR allowances plus two transferable £325,000 nil-rate bands.
APR is usually used for farmland and buildings and the agricultural value of these. BPR has always been used for the share in the trading business and also covers the potential development land or non-agricultural property of business assets.
The Labour government has estimated that the increase from the proposed £1m of reliefs to £2.5m will halve the number of estates claiming APR and BPR that are expected to pay inheritance tax and have said the move is designed to protect family farms while ensuring the larger estates contribute fairly.
The announcement comes after over a year of widespread farmer protests, including tractor demonstrations in central London and campaigning from organisations including the NFU and CLA.
Speaking on the changes, Lentells Agricultural Director, Debbie Thatcher commented "It's good to see that the government has listened in part to the industry with this uplift from £1m to £2.5m. Whilst it is very welcome, it could have gone much further to safeguard our farming family business future. With the value of land, machinery and livestock at a high level, it will still catch more than they think it does. With tight margins across the industry in a market where the farmer cannot set their own price, it is the affordability of the tax payments that are the problem. There are still challenges ahead so please keep the pressure on and keep talking to us and other professionals."
While this change will help a large number of family farms, it is still important to think ahead with Inheritance Tax planning and succession plans to ensure effective use of all the available reliefs. This will also help to make sure all documents, policies and plans are up-to-date and agreed on.
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 inheritance tax planning can take time so starting early is a good idea as it is important not to rush things and miss a vital step.
If you have concerns about how these changes may affect your farm or rural business, contact our Agricultural Team, who will be able to provide help and assistance on all aspects of Inheritance Tax Planning.
