Inheritance tax relief has long played a vital role in allowing farms and family businesses to pass from one generation to the next without being forced to sell assets. From April 2026, that landscape changes.
Reforms to Agricultural Property Relief (APR) and Business Property Relief (BPR) introduce a cap on the amount of qualifying assets that can benefit from 100% inheritance tax relief. Understanding these changes early is essential for effective succession planning.
What’s changing?
Under the new rules, individuals will be able to claim 100% relief on qualifying agricultural and business assets up to a combined value of £2.5 million. This allowance applies across both APR and BPR and will be frozen until at least April 2031.
Above the £2.5 million threshold, qualifying assets will generally receive only 50% relief, resulting in an effective inheritance tax charge on the excess value.
While this is an improvement on earlier proposals of a £1 million threshold, it represents a significant shift from the previous position, where no value cap applied.
Why this matters for farms and estates
For many farming families, land values alone may exceed the new relief limit. Although the higher allowance provides protection for a large proportion of estates, others will need to plan for potential inheritance tax liabilities that simply did not exist before.
The reforms also highlight the risk of relying on historic succession structures. Wills, ownership arrangements and partnership structures designed under the old regime may not deliver the intended outcomes in future.
Spouses, civil partners and other considerations
The relief allowance can be transferred between spouses or civil partners, aligning it with other inheritance tax allowances. However, this transferability does not extend to unmarried co-habiting couples, which can significantly affect planning outcomes.
Other factors, such as frozen inheritance tax bands and future changes to pension treatment, may further increase the value of estates exposed to inheritance tax.
What should families do now?
Although the changes take effect in April 2026, getting advice now provides more flexibility. Reviewing asset values, updating succession plans and considering liquidity planning can help protect family businesses and avoid unexpected pressures at a difficult time.
Download our full guide to inheritance tax reform and farm succession here
If you would like tailored advice after reading the guide, our Wills, Trust & Probate team is here to help. Contact us online here, or call us on 0114 266 6660