Updated Inheritance Tax proposals – what does it mean for farmers, landowners and other business owners?

The government’s announcement shortly before Christmas 2025, increasing the proposed Agricultural Property Relief (APR) and Business Property Relief (BPR) thresholds was a partial win for all campaigners involved in lobbying government over the previous 14 months.

A reminder below of what the government said:

“The government has today (Tuesday 23 December) announced that the level of the Agricultural and Business Property Reliefs threshold will be increased from £1m to £2.5m when it is introduced in April 2026. This allows spouses or civil partners to pass on up to £5m in qualifying agricultural or business assets between them before paying inheritance tax, on top of existing allowances. 

Following the reforms to Agricultural and Business Property Reliefs announced at Budget 2024, the government has listened to concerns of the farming community and businesses about the reforms.

Having carefully considered this feedback, the government is going further to protect more farms and businesses, while maintaining the core principle that the most valuable agricultural and business assets should not receive unlimited relief. The change will be introduced to the Finance Bill in January and will apply from 6 April.”

Recap

For more than 40 years, landowners, farmers and business owners have benefited from 100% Agricultural Property Relief and Business Property Relief available to them on qualifying assets when they die.

In the Autumn Budget 2024, it was announced that from 6 April 2026 these valuable reliefs would be restricted, capping the 100% relief available to £1 million per taxpayer for APR and BPR combined. Assets over £1 million would be subject to 50% relief.

It was also stated that this £1 million relief was not transferrable between spouses.

The reaction was instantaneous and following a sustained campaign by farming and business groups the government began to scale back on its plans.

In the November 2025 Budget, the proposals changed to allow the £1 million allowance to be transferrable between spouses. This provided some much-needed flexibility for married couples arranging their tax affairs.

Now, in its latest announcement, the government has gone much further, proposing that with effect from 6 April 2026, the 100% Agricultural Property Relief and Business Property Relief cap will be raised to £2.5 million per taxpayer.

This means that a couple who are married or in a civil partnership will now be able to pass on up to £5 million of agricultural or business assets between them without any Inheritance Tax incurred, on top of the existing allowances such as the nil rate band.

What does this mean for clients

For many, it will mean that their land and business assets will now be covered by 100% relief, either as an individual or as a married couple, although for larger businesses or landowners, there may still be a significant inheritance tax exposure risk.

Our advice for any client concerned about the new rules would be seek the guidance of their local Westcotts partner.

Clients who have previously sought advice and were considering changes to their wills or making lifetime gifts or other transfers, should check with their Westcotts advisers to ensure previous advice is still valid and that their proposed actions still achieve their overall objectives.

Anyone who has already undertaken tax planning may wish to consult their Westcotts partner, to be reassured of what the latest proposed changes mean for them.