In December 2025, the government revised its earlier proposals on Agricultural Property Relief (APR) and Business Property Relief (BPR). The threshold for 100% relief was increased from £1 million to £2.5 million. This £2.5 million allowance applies to the combined value of assets qualifying for APR and BPR. Any value above the £2.5 million threshold receives only 50% relief, with the remaining 50% becoming chargeable to inheritance tax.
What is Agricultural Property Relief?
Agricultural property relief reduces inheritance tax when transferring agricultural property. The purpose of this relief is to support farming families and businesses by lowering the tax burden when these assets are passed on to the next generation.
Benefits From The Reform
Supporting farms: The government estimates that around 85% of estates will not be affected. The £2.5 million threshold allowance and the ability to pass on unused allowance between spouses for a combined £5 million, removes a tax burden from many family farms.
Fairer taxation systems: By capping agricultural relief at £2.5 million, the government can ensure that smaller estates avoid inheritance tax. This approach also discourages investors with no connection to farming from buying agricultural land. Since the land would no longer be fully exempt from inheritance tax.
Raising revenue: The reforms are in place to collect and raise government revenue to fix public finance and fund public services.
Risks From The Reform
Financial burden on larger family farms: Even though the government has increased the threshold it still leaves out larger family farms. Farms exceeding the threshold face higher inheritance tax which they may not be able to afford. As a result, this can potentially force the sales of land or other assets.
Risk to the industry: High inheritance taxes may reduce farmers’ incentive to invest in the long‑term development of their businesses. The resulting pressure to sell land or essential assets could put family farms at risk, which may impact domestic food production and undermine national food security.
Uncertainty: The changes have created some uncertainty for many families. This has prompted them to reassess their estate planning. Country Land and Business Association (CLA) and The National Farmers’ Union (NFU) remain opposed to the tax and continue to campaign for further changes to the policy.
Conclusion
The reforms will come into effect in April 2026. There are currently mixed reviews on the additional changes, which have offered reassurance for some while raising concerns for others. APR aims to help protect family businesses and farms, but it has been at the centre of ongoing debates and protests. Unfortunately, the government have confirmed that there will be no additional changes to the relief. For more blogs and articles, please click here.
