What’s Changing?
In December 2025, the UK government announced that the Agricultural and Business Property Reliefs (APRs/BPRs) threshold will increase from £1 million to £2.5 million from 6 April 2026. This applies to combined qualifying agricultural or business property assets passed between spouses or civil partners. (gov.uk)
This means spouses or civil partners can pass up to £5 million in qualified assets between them (i.e. £2.5m each) without paying inheritance tax on those assets (on top of the nil-rate band). (gov.uk)
Who Benefits Most?
- Farm owners holding agricultural land or stock that qualifies for Agricultural Property Relief (APR).
- Family businesses whose assets qualify under Business Property Relief (BPR), including trade assets and operations.
- Estates with combined qualifying APR/BPR assets close to or exceeding the new threshold will see significantly lower IHT.
- Smaller estates below the threshold will not notice this change directly but will benefit indirectly from clearer rules.
Rules & Conditions to Watch
- Relief applies to agricultural or business assets that are qualifying under existing UK law (e.g. land used for farming, relevant chattels, tradeable business assets) (gov.uk)
- The increased threshold applies only from 6 April 2026. Estates settled before that date follow the earlier rules. Timing of death or estate planning transfers near that border is critical.
- Relief remains proportional: the first £2.5m in qualifying assets may receive 100% relief; above that amount, reduced relief may apply according to current rules.
- Spouses or civil partners must transfer assets to each other, with both being eligible under APR/BPR conditions. Exceptions or specific business structures may complicate relief eligibility.
Practical Planning Tips
- Review estate structure: spouses should consider mutual wills or deeds to maximise relief.
- Asset valuation timing: if estate value is close to thresholds, get professional valuations before April 2026 to avoid surprises.
- Chartered accountants or legal advisers: review asset composition (e.g. non-trade property, shares) to ensure they qualify.
- Gifting ahead of time: transfers to spouses, trusts or charities may be considered. Be mindful of the timeline and loss of relief if assets no longer eligible after transfer.
Example Scenarios
- Farmer Jane owns farmland and farming equipment valued at £3 million; she’s married to John. Before 6 April 2026, only £1m is fully relieved; after the change, £2.5m is covered, reducing IHT liability on £1.5m by up to current IHT rate (40%).
- Family business owned by Helen and Mark, with business assets of £2 million; under previous £1m limit, half was exposed; from April 2026, all £2m qualifies fully, avoiding IHT on those assets filtered through spouse’s reliefs.
What to Do Now
- If you have an estate plan, update it to reflect the new threshold.
- Ensure your assets qualify under APR/BPR — e.g. trading assets vs investment land might be treated differently.
- For businesses expecting ownership changes (e.g. passing business to children), plan in advance of the April 2026 effective date.
- Talk to your adviser about whether trusts, lifetime gifts, or other structures might offer further tax efficiency.
Key Takeaway
Raising the APR/BPR threshold to £2.5 million is a significant relief for farms and family businesses. Plan now to ensure your estate uses this benefit fully by considering valuations, qualifying assets, and estate structure.