APR and BPR – the new, new rules for 6th April 2026 for farmers

On the 23rd December, the government announced an early Christmas present to farmers and business-owners alike: an amendment to their previous proposal on Agricultural Property Relief (APR) and Business Property Relief (BPR).

APR covers land and farm buildings, and BPR applies to livestock, machinery and assets (e.g. holiday lets, farm shops).

Given the changes proposed in 2024 and then the subsequent amendments in 2025, what is the situation now. And what will go ahead in spring of this year?

A quick summary of Inheritance Tax (IHT)

For individuals, inheritance tax (IHT) is a tax on the estate (the property, money and possessions) paid after their death. The current rate of IHT is 40%. But there is nothing to pay if:

the value of your estate is below £325,000
you leave everything above £325,000 to your spouse or civil partner.

If you give away your home to your children, the value of your estates before IHT kicks in, increases to £500,000. If your spouse dies before you, you may be able to use his or her allowances, so you may not have to pay IHT until total assets are above £1 million (if the house goes to children or grandchildren.)

IHT on farming businesses

Since 1984, farmers and agricultural landowners have been exempt from inheritance tax, thanks to a series of tax “reliefs”. 100% inheritance tax relief is currently available on qualifying agricultural property and business assets (with the usual caveats and criteria).

What changed in October 2024?

In the autumn budget of October 2024, Chancellor Rachel Reeves announced plans to “restore economic stability” and to raise an estimated £.5bn from changes to APR and BPR.

The change proposed meant that from April 2026, the first £1m of combined business and agricultural assets would continue to attract no inheritance tax at all. But for assets over £1m, inheritance tax would apply with 50% relief; the IHT rate of 40% would be halved to 20%.

In effect, agricultural estates would receive relief of £1m, with up to £500,000 of additional relief, as with non-farming estates. If a farm is jointly owned by a couple in a marriage or civil partnership, the relief could double from £1.5m to £3m.

Using both spouses’ allowances, tax would be paid above £3m, at a rate of 20%.

If farms are gifted to family members at least seven years before death no IHT is payable.

And what changed in December 2025?

The government announced that the level of the APR reliefs threshold would be increased to £2.5m.

Using both spouses’ allowances, tax would be paid above £6m, at a rate of 20%.

This was obviously good news for farmers and agricultural landowners. The number of estates estimated to be affected by these rules has been halved to 185 per year, and those are just the largest, most valuable estates, worth over £6 million.

Please note: These changes are new and currently still proposals pending the Finance Bill 2026. They may still be subject to change. And these notes are guidance only. A financial or legal advisor can give you advice pertinent to your own situation and business structure.

Inheritance tax is complicated. If you need further information on how IHT can be managed, and how best to construct your will or whether a trust would suit you better, please contact Jenny Barron on 01756 692866 or email jenny.barron@awbclaw.co.uk.