Agricultural and Business Relief and Inheritance Tax: what you need to know

This article was written in August 2025 and information may be subject to change before April 2026.

Agricultural property relief and inheritance tax was a hot topic at this year’s Cheshire Show. Farm owners and agricultural landowners visiting our stand were keen to ask our advice on the changes and how they might affect their estates. So, we thought it a good idea to put everything we know about it in a blog so more of our clients can benefit.

Some people were concerned, even fearful, about the changing inheritance tax thresholds and the potential consequences for their farming family. While we appreciate change can be upsetting, our team were pleased to see people being proactive by starting the conversation. We are delighted to play a trusted role in your significant personal finance conversations – this is why we are here.  

In this blog, we are going to take a high-level look at what the changes are, who they will affect, and the action you can take to prepare.

What are the changes to Agricultural and Business Relief and Inheritance Tax?

At the Autumn 2024 Budget, the government announced it would restrict the inheritance tax relief available for agricultural and business property. 

The proposed changes to agricultural relief (AR) and business relief (BR) will come into effect from 6^th April 2026. Other than the type of asset that qualifies for each relief they act in exactly the same way. They are not separate reliefs so if you’ve used your agricultural relief you won’t get business relief on top.

Under current UK law, agricultural/business property is exempt from inheritance tax, meaning farmers/business owners are free to pass the family business (including farm buildings, residences, and land) down to the next generation without incurring tax.  

Under the new rules effective from 6^th April 2026, there will be restrictions on business and agricultural reliefs. 

New AR and BR inheritance tax thresholds from April 2026

The first £1m of combined agricultural and business property will benefit from 100% relief from inheritance tax. When you add in other IHT exemptions and allowances estates may be entitled to, the minimum tax-free allowance for a farm owner passing it down to their descendants could be up to £1.5 million. This figure can be doubled for couples.

On amounts over £1 million that qualify for AR or BR, estates will be eligible for 50% relief on the standard 40% rate of inheritance tax, reducing this to an effective rate of 20%.

Key facts about the changes to Agricultural and Business Relief and Inheritance Tax

• The changes will affect combined assets and property valued at more than £3 million. It’s a good idea to update your Will to ensure you use all reliefs available.

• Government forecasts suggest that 29% of farming business estates could pay more inheritance tax as a result.

• This equates to around 500 farming businesses across the UK, including those in the fishing and forestry industries.

• The forthcoming changes will impact how some farms and businesses can be passed down through the generations.

• The new legislation will allow a descendant to spread inheritance payments over a period of 10 years, though there is concern amongst the agricultural community that this period is not long enough. 

• Those protesting against the changes argue their families may have to sell off assets to foot any future inheritance tax bill. This will impact family businesses, agricultural supply chains and rural communities.

Seek financial advice to mitigate against Agricultural Relief and Business Relief changes

Independent financial advice will help you to make sense of what’s to come and mitigate the impact on your family’s estate. While on the face of it the changes appear complex and the consequences concerning, it’s important to retain perspective. Saying that, standing still and waiting to see what happens is not a plan of action.

An Independent Financial Adviser (IFA) is best placed to help you with succession and inheritance tax planning. There are several options, such as trusts and early gifting of assets, that may be used to reduce your family’s inheritance tax liabilities. The options depend on your individual circumstances. Our IFAs will guide you through the process, explaining the suitability and tax implications of the choices available.

Please don’t sit in fear of what’s to come. Call 01606 338914 and speak to one of our advisers to discuss your situation and evaluate what the forthcoming changes mean to you. We are always by your side.