For many farming families, the ability to pass land and business assets from one generation to the next has long depended on the availability of Agricultural Property Relief (APR) and Business Property Relief (BPR).
As of April 2026, significant changes to these reliefs will alter that position. While the fundamentals remain, new limits will introduce complexity and, for some, unexpected inheritance tax exposure.
Understanding what is changing, and how it may affect your family, is an important first step in protecting the long-term future of your farm. Our guide below explains what the IHT changes could mean for you
If you require immediate advice, our agricultural and farming solicitors advise farmers, landowners and rural estates on succession, ownership and long-term planning issues arising from regulatory and tax change.
What changes are being introduced to APR and BPR from April 2026?
From 6 April 2026, the Government will limit the availability of 100% Agricultural Property Relief and Business Property Relief. Full relief will apply only to the first £2.5 million of combined qualifying agricultural and business assets. Any value above that threshold will instead qualify for relief at 50%.
Importantly, the £2.5 million cap applies only to assets that would otherwise attract 100% relief. Assets already eligible for 50% relief are not included within the cap.
As with the current inheritance tax framework, any unused allowance will remain transferable between spouses or civil partners.
How could these changes affect family-run farms and agricultural businesses?
The introduction of a cap fundamentally changes the inheritance tax position for many farming families.
Where estates exceed the £2.5 million threshold, there is now the potential for a tax liability that may not previously have arisen. This, in turn, can create difficult decisions, whether that be selling land, raising finance, or restructuring the business.
For families who have spent generations building and maintaining their farms, the risk is not just financial, but also operational, with succession plans placed under strain.
Who is most likely to be affected?
The impact will be felt most acutely by larger, asset-rich estates that are more likely to exceed the £2.5 million limit.
There is also particular concern for farms where land values are high but income is comparatively modest. In these cases, the challenge is often not the value of the estate, but the availability of liquid funds to meet any inheritance tax liability without selling key assets.
What does this mean for succession planning?
Passing a farm intact to the next generation is likely to become more complex.
Families may need to give earlier and more careful consideration to how and when assets are transferred, whether through lifetime gifting, changes to ownership structures, or, in some cases, partial disposals.
What is clear is that succession planning will need to be more proactive, with a sharper focus on tax as well as family and commercial objectives. Without that forward planning, there is a real risk that inheritance tax could disrupt continuity.
Why is reviewing wills and estate planning so important?
Many existing Wills have been prepared on the basis that APR and BPR would apply without restriction. With the introduction of the new cap, those assumptions may no longer hold true.
A timely review of your Will arrangements can help ensure farmland, business interests and family intentions are properly reflected under the new inheritance tax rules.
If arrangements are not reviewed, there is a risk of unintended tax consequences, potentially leading to the sale of land or business assets to meet liabilities.
A carefully considered Will ensures that assets are structured appropriately, taking account of both the new relief limits and the wider intentions of the family.
For those without a Will, the position is more uncertain still. Intestacy rules do not take into account the specific needs of a farming business or the importance of tax efficiency, increasing the likelihood of both financial and practical difficulties.
Taking professional advice can help ensure that estate planning addresses not only inheritance tax, but also the succession of agricultural assets and the division of business interests. In some cases, trust structures may also play a role in protecting the long-term position of the estate.
In some cases, trust administration services may also need to be considered where longer-term asset protection and tax-efficient family planning are part of the overall strategy.
What practical steps should be taken now?
The starting point is understanding the value of the estate and how the new £2.5 million threshold may apply. From there, families can begin to assess any potential inheritance tax exposure and consider what steps may be required.
This will often include reviewing existing Wills, as well as partnership or shareholder arrangements, to ensure they remain appropriate in light of the changes. Lifetime gifting, whether outright or through a trust, may also form part of the discussion.
What is consistent across all scenarios is the importance of taking advice at an early stage. This creates the time and flexibility needed to put effective, tax-efficient plans in place.
Where the new rules may create exposure above the relief threshold, our inheritance tax planning solicitors can help assess liability and consider the most appropriate planning options.
Conclusion
The changes coming into force in April 2026 represent a significant shift for farming families. While not every estate will be affected in the same way, the introduction of a cap on APR and BPR means that more families will need to engage actively with inheritance tax planning.
With careful, considered advice, it remains possible to protect both the value of the estate and the continuity of the farm. The key is to start planning early.
If your estate includes agricultural land or a farming business, now is the time to review your Will and wider succession plans.
A proactive approach can help ensure that your farm is passed on in the way you intend, without avoidable tax consequences.
To discuss your circumstances, or to arrange a review of your existing Will, please contact Rowena Ridgway or a member of our Wills, Trusts & Tax team.
Key Contact
Rowena Ridgway
Wills, Trusts & Tax Partner
Rowena is an experienced Partner within the Wills, Trusts & Tax team whose expertise spans all non-contentious matters.
