Agricultural Property Relief Changes from April 2026: What Farmers Need to Know

From 6 April 2026, Agricultural Property Relief (APR) and Business Property Relief (BPR) will change in a way that could have a significant impact on inheritance tax planning for farming families, landowners and rural business owners.

The Government has confirmed that a new £2.5 million allowance will apply to property qualifying for 100% APR and BPR, with any unused allowance transferable between spouses and civil partners.

Although these changes apply across the UK, this article focuses on what they mean for estate planning in England and Wales.

This article was updated to reflect the Government’s announcement on 23 December 2025 setting a £2.5 million cap on Agricultural Property Relief and Business Property Relief ahead of the reforms coming into effect from April 2026.

Key points at a glance

• From 6 April 2026, 100% APR and BPR will be capped at £2.5 million per estate, with 50% relief applying to qualifying value above this level.
• The £2.5 million allowance is shared between APR and BPR, so agricultural and business assets are counted together.
• Unused allowance can be transferred between spouses or civil partners.
• A £2.5 million allowance will also apply to trusts holding qualifying property, subject to detailed trust-specific rules.
• Inheritance tax on APR and BPR assets can be paid in 10 equal annual interest-free instalments.
• From April 2026, Business Property Relief on shares traded on certain “not listed” recognised stock exchanges will be limited to 50%.

For some families, these changes may mean that part of an estate which was previously fully protected from inheritance tax could now become taxable.

How Agricultural Property Relief works

Agricultural Property Relief is an inheritance tax relief that can reduce or remove tax on qualifying agricultural land, buildings and, in some cases, farmhouses. Depending on the circumstances, APR can apply at either 100% or 50%.

Business Property Relief works in a similar way for qualifying business assets, such as interests in trading companies or partnerships.

Under the current rules, there is no overall value cap on how much property can qualify for 100% APR or BPR. This has allowed some large family farms and rural businesses to pass on substantial value without an inheritance tax charge.

APR and BPR also interact with other inheritance tax allowances, including the £325,000 nil rate band and, where relevant, the residence nil rate band.

What is changing from April 2026?

1. A £2.5 million cap on 100% APR and BPR

From 6 April 2026, a new £2.5 million allowance will apply to the combined value of property that qualifies for APR and BPR at the 100% rate.

Relief up to £2.5 million will continue at 100%. Any qualifying value above this threshold will receive relief at 50%, meaning that half of the excess value will remain subject to inheritance tax.

2. APR and BPR share the same allowance

The £2.5 million allowance applies to the estate as a whole and is shared between APR and BPR. You do not have a separate allowance for agricultural property and business property.

For example, farmland qualifying for APR and shares in a family trading company qualifying for BPR are added together when assessing how much value benefits from 100% relief.

3. Transferability between spouses and civil partners

If the £2.5 million allowance is not fully used on the first death, any unused portion can be transferred to a surviving spouse or civil partner. This applies even where the first death occurred before April 2026.

In practice, this means a couple may be able to protect up to £5 million of qualifying property between them before inheritance tax is due, provided the relief conditions are met.

4. Trusts and the £2.5 million allowance

Trusts holding qualifying agricultural or business property will also be subject to a £2.5 million limit for 100% relief. The way the allowance applies will depend on factors such as the type of trust and when it was created.

The detailed rules are complex, particularly where there are multiple trusts or historic planning arrangements, and professional advice is often essential.

5. Paying inheritance tax by instalments

The option to pay inheritance tax in 10 equal annual interest-free instalments will be extended to all property qualifying for APR or BPR.

This is intended to reduce pressure on families who might otherwise feel forced to sell land or business assets quickly to fund a tax bill.

What does this mean for farming families?

The changes do not remove APR or BPR altogether, but they do limit how much value can benefit from full relief.

If an estate includes £5 million of qualifying agricultural property:

• The first £2.5 million may still qualify for 100% relief
• The remaining £2.5 million would receive 50% relief, leaving £1.25 million exposed to inheritance tax

At the current inheritance tax rate, this could result in a substantial tax bill where none previously arose.

Who is most likely to be affected?

The reforms are most relevant if:

• You own agricultural land or rural property worth more than £2.5 million
• You have both agricultural property and business interests qualifying for BPR
• Your estate includes land with development potential
• You have used trusts as part of succession or estate planning

Smaller farms may be unaffected, but reviewing existing arrangements is still advisable.

Estate planning considerations ahead of 2026

The new rules make careful planning more important than ever. Key areas to review include:

• Whether Wills are structured to make effective use of both spouses’ allowances
• How agricultural and business assets are owned and valued
• The interaction between APR, BPR and other inheritance tax allowances
• Existing trusts and whether they still meet family objectives
• The balance between fairness, control and tax efficiency when passing assets to the next generation

Starting this process early can provide more options and reduce the risk of unintended tax consequences.

How ELM Legal Services can help

Estate planning for farming families and landowners is already complex, and the changes taking effect from April 2026 add another layer of difficulty.

At ELM Legal Services, we help clients across England and Wales review and update their estate planning in light of changes to APR and BPR. This includes reviewing Wills, advising on the use of trusts, and helping families plan for succession in a clear and practical way.

If you would like to understand how these changes may affect your estate, or if you want to review your current arrangements ahead of 2026, our team can help you plan with confidence.

Book a free initial meeting today to discuss your options.

Frequently asked questions

Will everyone with a farm pay inheritance tax from 2026?
No. Many estates will remain within the £2.5 million allowance and other inheritance tax exemptions. Larger or more complex estates are more likely to be affected.

What if my land is worth less than £2.5 million?
If your qualifying assets fall below the allowance, the new cap may not apply directly, but it is still sensible to review how your estate is structured.

Can the rules change again?
The Government has published detailed proposals, but further guidance and technical legislation may follow. Keeping plans under regular review is recommended.