Inheritance tax agricultural property relief u-turn

What was originally planned

The government’s Autumn Budget 2024 and subsequent Budget 2025 proposed reforms to Agricultural Property Relief (APR) and Business Property Relief (BPR). These are key reliefs that reduce Inheritance Tax (IHT) on farms and family businesses.

Under those plans:

• APR/BPR would still provide relief, but only a limited amount of qualifying assets would be eligible for 100% relief from IHT (previously unlimited).
• A combined allowance of £1 million of qualifying APR/BPR assets would get 100% relief.
• Anything above £1 million would only get 50% relief, meaning an effective 20% IHT charge on the excess.

This was a significant tightening compared to before and would have brought many more farms and family businesses into charge.

What has been announced

On 23rd December 2025, the government substantially eased those initial reforms, following major political and agricultural sector backlash, as follows.

• The threshold for APR (and BPR) qualifying for 100% relief has been raised from £1 million to £2.5 million per person.
• This means a married couple or civil partners can pass on up to £5 million of qualifying agricultural or business assets before IHT applies (on top of the usual nil-rate bands).
• Only above £2.5 million will 50% relief apply.
• These changes still come in from 6th April 2026.

What this means in practice

This means that more family farms will remain exempt from IHT when passed on and in turn, this reduces the number of estates affected and softens what was seen as a punitive measure. Spouses will now be able to pool allowances, further reducing liability for typical farming families.

How can Ellis Jones help?

If you would like further information on Inheritance Tax, your Will and Estate Planning, please contact our specialist Wills, Trusts and Probate team on 01202 525333 or email wills@ellisjones.co.uk