From April 2026, the way Agricultural Property Relief (APR) and Business Property Relief (BPR) work will change significantly. Under the current rules, qualifying agricultural land, farm buildings, and certain business assets can receive up to 100% relief from Inheritance Tax (IHT), meaning they can be passed on without any tax liability. However, under the new rules, this 100% relief will be capped at £1 million per person. Any value above that threshold will only receive 50% relief, with the remaining value being subject to IHT at 20% — half the standard rate of 40%.
Why the Change is Being Introduced
The government has stated that the changes are intended to make the IHT system fairer and ensure that reliefs are not disproportionately benefiting the largest estates. Critics of the current system have argued that unlimited relief allows very high-value farms and businesses to pass entirely free of tax, regardless of size or profitability. By introducing a cap, policymakers aim to strike a balance between supporting family-run operations and ensuring that extremely high-value asset transfers contribute more to the tax system.
Who Will Be Affected
The changes will have the most impact on farmers and family business owners whose qualifying assets exceed £1 million in value. For many small and medium-sized agricultural operations, this cap may not be an immediate concern. However, land values in certain parts of the UK, particularly in the South East and other high-demand areas, mean that even modest-sized farms could exceed the threshold. The same applies to certain family-run businesses with valuable premises, machinery, or intellectual property. For those inheriting or gifting such assets, there may now be a tax bill to plan for, even if the business itself is not especially cash-rich.
Potential Implications for Succession Planning
This change will make forward planning even more important. Families may need to review their wills, partnership agreements, and ownership structures to determine how the relief cap will affect them. In some cases, restructuring ownership between family members could help make full use of multiple £1 million allowances. In others, the focus may shift towards strategies for funding potential IHT liabilities without placing financial strain on the business or farm. Importantly, this change may also influence decisions about whether to transfer assets during a person’s lifetime rather than on death.
Balancing Opportunity and Risk
While the cap is designed to target the highest-value estates, the nature of agricultural and business assets means that some families who are not necessarily wealthy in liquid terms may still be caught. For example, a farm with valuable land but modest annual income may have to consider how to meet an IHT bill without selling essential assets. On the other hand, the continued availability of 50% relief above the £1 million threshold does still represent a significant tax saving compared with the full 40% rate.
The April 2026 changes to Agricultural and Business Property Relief mark a notable shift in UK inheritance law. They are intended to make the system more equitable, but they will require affected families to be proactive in their planning. Farmers, landowners, and business owners should review their current arrangements well before the changes take effect to ensure they are in the best position to manage any future tax liability. Seeking professional advice will be essential for those close to or above the £1 million threshold.
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