A Welcome Boost: Inheritance Tax Relief Thresholds Raised for Farmers and Business Owners

For business owners and farmers, Environment Secretary Emma Reynolds has delivered an early Christmas present this year. The government’s decision to increase the agricultural and business property relief (APR/BPR) threshold to £2.5 million per individual from April 2026 is significant. According to government analysis, the number of estates affected by the reforms is projected to halve, from around 375 down to 185 in 2026–27. An estimated 85% of estates claiming agricultural property relief are now expected to pay no additional inheritance tax.

From 6 April 2026, APR or BPR-relieved assets above £2.5 million will receive 50% relief, resulting in a 20% effective tax rate on values above the threshold.

It is worth noting that the announcement did not clarify whether the 100% relief allowance for APR or BPR assets held in trust will also be raised to £2.5 million.

While this increase in the allowance means more estates will benefit from 0% tax on death for qualifying assets, it does not eliminate the need for careful planning. Ongoing and future planning remains highly valuable. It is still essential to review whether assets qualify for relief, as much of the recent planning has focused on securing these reliefs in the first place. The reforms and the discussions around them have brought greater attention to how businesses are structured and operated, enabling more businesses to qualify for relief that might otherwise have missed out for various reasons.

Caroline Foulger, Partner in our Private Client department, commented on these changes in Business & Accountancy Daily, originally posted on 24 December 2025, which can be read here [external link].