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Just before Christmas, the UK government announced changes to agricultural and business property reliefs, with the threshold set to increase from £1 million to £2.5 million from 6 April 2026.

This will allow spouses or civil partners to pass on up to £5 million in qualifying agricultural or business assets between them. The introduction of transferability gives families greater scope to plan succession in a way that preserves relief across generations, without the need for previously anticipated restructures.

 

What does this mean for agricultural businesses?

Raising the threshold will significantly reduce the number of farms and business owners facing higher inheritance tax bills, with only the largest estates affected.

The number of estates claiming agricultural property relief that are affected by the reforms in 2026–27 will be halved, from 375 to 185.

A large number of estates will benefit, with inheritance tax being cut by hundreds of thousands of pounds for many families.

The number of estates affected by the reforms that claim only business relief will fall by a third (excluding those holding only AIM shares). Around 85% of estates claiming agricultural property relief in 2026–27 is forecast to pay no additional inheritance tax on their estates. This figure also includes those that claim both agricultural and business property relief.

 

How can you plan for the reforms?

Ahead of the agricultural and business property relief reforms coming into force on 6 April 2026, here is what we recommend you do to prepare:

While the increased threshold and transferability of the allowance are welcome, the reforms represent a substantial shift away from unlimited 100% relief.

 

Need legal advice? Contact us

If you’d like expert legal advice for your business around agricultural and business property reliefs, please contact us today by emailing info@bowcockpursaill.co.uk, call 01782 200000 or completing our short contact form.

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