Compliance
Inheritance Tax Reliefs for Farms & Businesses: Navigating the APR & BPR Changes
With reforms to Agricultural Property Relief (APR) and Business Property Relief (BPR) coming in April 2026, this guide shows what’s new, who’s affected, and practical steps to protect family-run estates.
By NomadicTax Research Team • 5-8 min read • February 23, 2026
## Reform Overview
- From **6 April 2026**, the threshold for **100% relief** for combined agricultural or business property under APR or BPR is being raised to **£2.5 million per estate**, up from previous **£1 million**.{{citeturn1search2turn1search5}}
- Any qualifying relievable assets **above £2.5 million** will now benefit from **50% relief**, rather than full relief, under the new rules.{{citeturn1search2turn1search5}}
- The unused portion of this threshold can be **transferred between spouses or civil partners**, effectively allowing up to **£5 million** in qualifying assets to be passed tax-free between partners under full relief.{{citeturn1search2turn1search5}}
## Who’s Affected & What Estates Are Under Pressure
- **Large farms and family businesses** with significant land or business assets valued over £2.5 million. Smaller estates may be unaffected.{{citeturn1search0turn1search2}}
- Estates with **business property relief** for non-listed trading company shares are impacted, especially those relying wholly on BPR.{{citeturn1search2}}
## Example Calculations
- *Estate A*: Small mixed farm, qualifying for APR. Value = £3 million. The first £2.5 million receives **100% relief**; the remaining £500,000 is eligible for **50% relief**, giving an effective IHT rate up to **20%** on that portion (i.e. 50% of 40%).
- *Estate B*: Married couple each own qualifying business assets. Combined estate is £5 million. Spouse relief transfers unused threshold: both can use £2.5 million full relief, protected by spouse transfer rules. Assets above threshold pay IHT at reduced relief rates.
## Strategies to Mitigate IHT Bills
- **Asset timing**: gifts or transfers before April 2026; bringing in joint ownership to maximize thresholds.
- **Trust planning**: qualifying trust structures may still benefit, but beware that trust-held qualifying business or agricultural property relief is subject to the combined relief limit.{{citeturn1search2}}
- **Spousal transfers**: ensure wills and estate plans facilitate transfer of unused reliefs between partners.
- **Valuation and timing**: having accurate valuations will be vital. Possibly defer certain asset decumulations till after reliefs are fully understood.
## Policy Context & Fairness Rationale
- Designed to balance revenue-raising while protecting smaller farms and business-run estates from overly punitive IHT. Government expects only **185 estates** claiming APR/BPR would pay more IHT in 2026-27 under new threshold vs previous forecasts.{{citeturn1search0turn1search5}}
- The reforms were controversial for initially imposing a £1 million threshold. Raising to £2.5 million followed industry feedback.{{citeturn1search5}}
## Action Checklist
- Assess value of business and farmland to see if your estate crosses the threshold.
- Re-structure ownership if possible, e.g. joint ownership, spouse holdings.
- Update wills/trusts to ensure allowance transfers.
- Review valuation dates and reports.
- Consider whether any changes can be made before the implementation date.
## Summary
These changes tighten reliefs for large estates but offer generous protection for many families and farm businesses. With effective planning and good advice, the impact can be managed. Estates looking to pass on valuable agricultural or business assets must act well ahead of April 2026.