Changes announced for Farm Inheritance Tax Relief
Changes to IHT for farmers announced in the Autumn 2024 budget meant thousands of farmers were potentially due to pay IHT for the first time, with 20% tax being due on agricultural assets exceeding £1 million.
This led to farmers protesting with tractors, much opposition from NFU and rural MPs and concern over farm succession and forced land sales.
On 23 December 2025 the government announced that the level of Agricultural and Business Property Reliefs threshold will be increased from £1m to £2.5m when it is introduced in April 2026. Raising the threshold will significantly reduce the number of farms and business owners facing inheritance tax bills under the new reforms.
The new rules:
The allowance for qualifying Agricultural Property Relief and Business Property Relief has increased to £2.5 million per individual.
Couples can now pass on up to £5 million of qualifying agricultural or business assets tax free using a combination of individual allowances and transferability between spouses. This is available in addition to the existing nil-rate bands for those people who are widowed and have lost spouses/civil partners before the policy was introduced.
Qualifying assets above the allowance will continue to be subject to 50% relief.
These changes come into effect from April 2026.
Please contact us if you need further information.