Breaking News: Government Increases IHT Relief for Farms and Businesses to £2.5 Million
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The government has today announced significant changes to Agricultural Property Relief (APR) and Business Property Relief (BPR) for inheritance tax, following widespread concern about the impact of the original proposals.
What has changed?
From 6 April 2026, APR and BPR will be reformed as follows:
- The allowance for 100% inheritance tax relief will increase to £2.5 million per individual,
- Assets above £2.5 million will attract 50% relief
- This means that, between them, a married couple or those in a civil partnership can pass on up to £5 million of qualifying agricultural or business assets before inheritance tax is payable, in addition to existing allowances such as the nil-rate band
This represents a substantial increase from the previously proposed £1 million allowance and will be welcome news for many farming families and business owners.
What does this mean in practice?
The changes reduce the immediate inheritance tax burden for larger business and farming estates and provide greater certainty for succession planning. However, the reforms are still complex and will require careful consideration, particularly where assets exceed the £2.5 million threshold or where wider estate planning is needed.
With the changes not due to take effect until April 2026, there is a valuable window of opportunity to review wills, ownership structures and long-term succession plans.
How we can help
Our Private Wealth and Rural teams regularly advise farming families and business owners on inheritance tax planning, succession, and estate structuring. If you would like advice on how these changes may affect you or your family, please contact our team.
This is a developing area and further guidance is expected. We will continue to provide updates as more detail becomes available.