Government announces major increase to agricultural and business property relief thresholds to £2.5 million

From 6th April 2026, the threshold for 100% Agricultural Property Relief (APR) and Business Property Relief (BPR) will still be reduced, but instead of the originally announced £1 million, the threshold will now be £2.5 million per estate.

This represents a substantial improvement on the reforms originally announced at Budget 2024, which saw previously uncapped reliefs undergo significant reform, and will provide greater protection for family farms and trading businesses.

The change also builds on the Autumn 2025 Budget announcement, which confirmed that the APR and BPR allowance will be transferable between spouses or civil partners, something that was originally not included in the measures.

What does this mean in practice?

Under the new rules:

• Each individual will be able to pass on up to £2.5 million of qualifying agricultural or business assets with 100% inheritance tax relief
• Any qualifying assets above this level will continue to receive 50% relief
• As the allowance is transferable between spouses or civil partners, a couple will be able to pass on up to £5 million of qualifying assets between them tax-free
• This is in addition to existing inheritance tax allowances, including the £325,000 nil-rate band per person

In total, a married couple or civil partners may be able to pass on a farm or business worth up to £5.65 million without any inheritance tax liability.

Why has the government made this change?

Following the proposed reforms at Budget 2024, the government received strong representations from farmers and business owners about the potential impact on family-run operations.

After considering this feedback, the government has stated that it wants to better protect ordinary family farms and businesses, while maintaining the principle that the largest and most valuable estates should not receive unlimited relief.

What should you do next?

While this change provides significant tax relief for most farms and businesses, it also highlights the importance of careful estate and succession planning. Now is a good time to:

• Review your current succession plans to ensure they take into account all the changes that are due to come into force from next April
• Consider whether the structure of ownership for your farm or business is still tax-efficient
• Take advice about any planning that you might be able to undertake between now and April 2026 to maximise tax efficiency long term

We are running a webinar on all things APR/BPR on 4th February, so please tune in for more live updates on the matter – Webinar: Plan now for the April 2026 changes to BPR and APR – Gravita