Over the last year, farmers, landowners, and industry leaders have been lobbying against the proposed changes to Agricultural Property Relief (APR) and Business Property Relief (BPR) for Inheritance Tax (IHT).
On December 23 2025, the Government announced that, from 6 April 2026, the transferable APR/BPR allowance would be £2.5 million (or £5 million for a married couple or civil partners).
Whilst this increased figure is welcome, some still face the prospect of significant IHT liabilities on their death, and careful planning remains essential to protect family wealth and help reduce their tax exposure.
Why are the changes to APR and BPR important?
APR and BPR reduce the amount of IHT that farmers, landowners, and business owners pay when they pass qualifying assets to the next generation.
However, not all land or agricultural/business assets qualify for relief, so specialist advice to maximise these important IHT protections is crucial.
Farmers need to know what assets qualify for relief, how business debts and liabilities affect the calculation, the impact of any non-qualifying assets etc and carefully consider the timing and structuring of any asset transfers.
Until April 6 2026, it’s possible to pass/transfer an unlimited amount of qualifying APR/BPR assets to the next generation IHT-free.
Expert advice on how to do this is essential – if not, other tax liabilities could be triggered (eg Capital Gains Tax).
From April 6 2026, IHT at 20% will be payable on APR/BPR assets over the £2.5 million allowance.
What this means for Inheritance Tax planning
The APR/BPR allowance reduces the potential IHT burden for many farming families, but it doesn’t eliminate the need for proactive planning. You should consider these key points:
- Act before April 5 2026: The new rules take effect from April 6 2026. There may be planning opportunities available before this date that could help mitigate the impact of the incoming changes/restrictions.
- Review your business structure: The way your business is structured can significantly impact the reliefs available. Consider whether your current structure optimises your position under the new rules.
- Obtain a current valuation: Understanding the accurate value of your farm, land and qualifying assets is crucial and the first step in effective planning.
- Consider lifetime gifts: Strategic lifetime gifting of assets may still play a role in succession planning, though this must be balanced against your need to maintain control and/or derive income during your lifetime.
- Succession beyond tax: Whilst tax is an important consideration, successful succession planning also addresses who will run the farm, when and how they should take control etc and, where necessary, balance fairness between family members.
Time to act now
The new APR/BPR restrictions come into effect from April 6 2026, and IHT pension reforms are to be introduced from April 6 2027 (when the value of unused pension funds and pension death benefits will be included in your estate with IHT payable at 40%).
Proper structuring to protect your wealth/legacy takes time – so anyone wanting to consider succession and/or pension planning should act now.
