Good news for British farmers and business owners: the Government has announced that from 6 April 2026, the threshold for Agricultural Property Relief (APR) and Business Property Relief (BPR) will rise from £1 million to £2.5 million.
Inheritance Tax (IHT) planning has been under intense scrutiny in the last year, especially for family farms and owner-managed businesses.
This is expected to reduce the number of farm and business estates facing higher inheritance tax bills, while still limiting unlimited tax relief for the very largest estates.
Below, we break down what’s happened, what it means, and what you should do next.
What’s Happened?
In a press release published on 23 December 2025, the Government confirmed it will increase the “Agricultural and Business Property Reliefs threshold” from £1m to £2.5m when the reforms take effect on 6 April 2026.
This means:
- If you own a qualifying farm or business, you can pass on up to £2.5 million of those assets with potentially no inheritance tax under these reliefs (increased from the previous £1 million cap).
- If you’re married or in a civil partnership, you may be able to combine your allowances, meaning you could pass on up to £5 million of qualifying farm or business assets without inheritance tax.
Importantly, this is in addition to the usual inheritance tax allowances, like the standard £325,000 nil-rate band.
The Government says it listened to concerns
The announcement explicitly states that following the reforms to APR and BPR announced in the 2024 Autumn Budget, the Government received strong feedback from farmers and businesses, pushing them to adjust the policy.
They also emphasised that they wish to keep it so that the biggest estates don’t benefit from unlimited relief, while providing stronger protection for ordinary family farms and trading businesses.
The change will be added to the Finance Bill in January
The Government says this will be introduced as an amendment to the Finance Bill 2025 in January, applying from 6 April 2026.
What This Actually Means
This is a meaningful change, and for many families, it will reduce or remove the IHT risk that had previously been expected.
1) More farms and businesses will be protected from IHT
The Government says this will halve the number of estates claiming APR (including those also claiming BPR) that will be affected by the reforms in 2026/27, dropping from 375 to 185 estates.
It also forecasts that:
- Around 85% of estates claiming APR in 2026/27 (including those also claiming BPR) will pay no more IHT as a result of the reforms.
- Many estates will see IHT reduced by hundreds of thousands of pounds, compared to what they would have faced.
So if your estate is valuable but not one of the “largest of the large”, the revised £2.5m threshold may significantly reduce your tax exposure.
2) Qualifying assets above £2.5m still receive relief, but at 50%
The Government confirms that:
- 100% relief applies up to £2.5m.
- 50% relief applies above £2.5m.
This is important because it’s not a cliff edge where relief disappears. Above the threshold, qualifying assets remain taxed at a lower effective rate than most other estate assets.
3) Couples may be able to pass significantly more than £5m tax-free
While the headline is “£5m for couples”, the notes in the announcement include a helpful example:
A married couple or civil partners can potentially pass on a farm worth up to £5.65m tax-free by combining:
- Two £2.5m allowances (APR/BPR)
- Two £325,000 nil-rate bands (transferable between spouses).
Source: GOV.UK
That’s a major figure, but the exact outcome depends heavily on whether assets qualify for APR/BPR and how ownership is structured.
4) Some widowed people will also benefit
A key point here: the Government states that the transferable allowance will also apply to widowed people, including those whose spouse or civil partner died before the new policy was introduced.
This means the change isn’t only relevant to future estates, it could matter for people already widowed who expect to transfer unused allowance.
Who Should Pay Attention?
While this announcement is framed around farming, it also matters for many owner-managed businesses.
This is especially relevant if you are:
- A farming family estate with land/property value above £1m
- A trading business owner thinking about succession
- A family business where shares/business assets form a large part of the estate
- A couple planning their wills and estate structure together
What You Should Do Next (Practical Steps)
Even though the threshold increase is good news, it doesn’t remove the need for planning.
APR and BPR are still technical reliefs, and they can be lost if an estate is structured incorrectly.
Here are the steps we recommend.
1) Confirm whether your assets qualify
The relief only applies to qualifying agricultural and business assets, and eligibility depends on:
- What the asset is
- How it is used
- Who owns it
- Whether it is tied to a trading business or investment activities
It’s worth reviewing this now, because a small detail (e.g. an asset being treated as an investment rather than trading) can change the tax outcome significantly.
2) Review your succession plan and will assumptions
A lot of IHT planning done over the past 12-18 months may have been based on the earlier £1m threshold.
Now that the threshold is increasing, you may want to revisit:
- Whether planned gifts still make sense
- Whether trusts are still appropriate
- Whether insurance is still needed
- Whether ownership structures should be simplified
The best estate plans are the ones aligned with both tax rules and your family/business intentions.
3) Get valuations and records in order
IHT relief calculations rely heavily on accurate valuations and documentation.
If your farm or business estate is anywhere near the threshold, now is the time to ensure:
- Land and property values are up to date
- Shareholdings are properly documented
- Partnership agreements reflect reality
- The Business structure supports the relief claimed
A Quick Example
Let’s say an individual passes away with:
- £2.2m in qualifying farm/business assets
- £400k in other assets (e.g., savings/property outside relief)
Under the new £2.5m threshold:
- The £2.2m qualifying assets could receive 100% relief, so potentially no IHT due on that portion.
- The remaining estate still depends on standard allowances and planning (e.g., nil-rate band and spouse exemption).
For couples, the relief becomes more powerful, but planning is still needed to ensure the relief is preserved.
Final Thoughts
The increased £2.5m threshold is clearly a positive move for farmers and trading business families, and it may reduce the number of estates facing increased inheritance tax bills.
That being said, eligibility and planning remain critical.
Even with higher thresholds, families can still be caught out by:
- Assets that don’t qualify
- Structures that reduce relief
- Investment-heavy businesses
- Unclear ownership or outdated agreements
Need help reviewing your position?
At CRM Accountants, we help individuals, families, and owner-managed businesses understand:
- How APR and BPR apply
- What your estate exposure looks like
- How to structure succession efficiently
- What practical steps reduce risk while protecting the future of the business or farm
If you’d like a review of your farm or business estate planning in light of this announcement, we’re happy to help. Get in touch today to learn more.
