Inheritance Tax Reliefs increase to £2.5m for farmers and businesses

Today’s announcement that the Inheritance Tax threshold for Agricultural Property Relief (APR) and Business Property Relief (BPR) will rise from £1 million to £2.5 million is, without doubt, welcome news for farmers and business owners across the UK.

From April 2026, individuals will be able to pass on up to £2.5 million of qualifying agricultural or business assets free from Inheritance Tax. For married couples and civil partners, this effectively increases the combined threshold to £5 million.

At face value, this represents a meaningful strengthening of the reliefs that underpin long-term succession planning for family farms and owner-managed businesses.

Commenting on the announcement, Nick Banks, Partner and Head of Agriculture, said:

“This is clearly welcome news for our farming clients, and, for some, it will come as a real relief after what has been a very difficult and uncertain year. In that sense, it feels like an early Christmas gift. However, while the destination is positive, the journey to get here has been deeply frustrating. 

Months of speculation, lobbying and worry have taken their toll, with many families left in limbo when trying to plan for succession, investment and the future stewardship of their land and businesses.

This change does not remove the potential tax charge altogether; it simply mitigates it for some. As a result, tax planning may still be required where action has not already been taken. For families who have acted, we’ll need to review the implications of this increase, but it’s fair to say that some of the steps taken may have been different had this higher threshold been known earlier.”

He added:

“My overriding concern is that this is a very irresponsible way to devise policy that has such a significant impact on those affected. Despite a Budget less than a month ago, clarity has only arrived now, after months of uncertainty across the agricultural community. So why this was not announced at the Budget is difficult to understand.”

The detailed announcement published today by HM Treasury provides a framework for the changes, but important technical and practical considerations remain.

We’ll now be digesting the detail and will provide further clarity and practical guidance in the New Year.

In the meantime, this change represents a step in the right direction – even if it has taken far too long to arrive.