How The 2026 Agricultural And Business Property Relief Changes Could Affect Your Estate

From April 2026, the rules surrounding Agricultural Property Relief (APR) and Business Property Relief (BPR) are set to change; a move that could significantly affect how farming families, rural business owners, and property investors plan for the future. In this article, Ashley Partridge, Head of our Wills, Probate, and Estate Planning Department, explains what the new legislation means, who will be affected, and what steps you can take now to safeguard your estate.

What is changing in 2026?

Under current rules, Agricultural Property Relief (APR) and Business Property Relief (BPR) can reduce the value of qualifying agricultural or business assets for Inheritance Tax (IHT) purposes, in some cases by up to 100%.

However, from 6 April 2026, the Government plans to introduce a single £1 million 100% relief allowance per person, which will apply across both agricultural and business assets. Any qualifying agricultural or business property above this £1 million allowance will attract only 50% relief, meaning part of the value will become chargeable to Inheritance Tax.

This change forms part of a broader reform of Inheritance Tax reliefs designed to limit the tax advantages available to larger rural and business estates.

Who will be most affected?

The new allowance and reduced relief are likely to have the greatest impact on:

• Farming families who own both land and shares in a family business or where the farm or business property already exceeds £2million.
• Rural business owners whose enterprises include both trading and property elements.
• Farming families or family businesses where the majority of shares, assets or land are historically held for planning purposes by older generations rather than a more diversified ownership.

For many individuals in these categories, the combined value of qualifying assets already exceeds £1 million, which means their estates could face a larger Inheritance Tax liability after April 2026.

These changes pose additional pressures particularly on farmers where the existing rules create difficulty, for example loss of allowances where agricultural land and buildings have been diversified into other commercial uses or holiday let businesses.

Why are these reliefs so important?

Agricultural and business property reliefs play a crucial role in helping family-run farms and businesses pass smoothly between generations. Without them, many estates would face substantial Inheritance Tax bills, potentially forcing families to sell parts of their land or business to cover the cost.

These reliefs recognise the unique position of agricultural and trading businesses, often asset-rich but cash-poor, and have helped preserve rural enterprises and family farms for decades.

The upcoming changes mark a significant policy shift, one that may require you to review and update your succession plans.

What does this mean for your estate planning?

If your estate includes farmland, business interests, or a mix of property and trading assets, these reforms could directly affect the amount of Inheritance Tax payable by your estate.

You should consider:

• Asset valuation – determining which parts of your estate currently qualify for APR or BPR and how much you may exceed the 100% relief allowance.
• Ownership structure – reviewing how assets are held between spouses, civil partners, family members, and business partners.
• Trusts and corporate entities – assessing whether existing structures remain tax-efficient under the new regime.
• Gifting strategies – considering whether early gifts could help reduce future exposure to IHT.
• Cross-generational succession – ensuring your Will, partnership agreements and shareholder arrangements align with the new rules.

The ability to transfer any unused part of the £1 million allowance between spouses and civil partners announced in the 2025 Budget may reduce the need for complicated asset-splitting, but a review remains essential to protect your position. It remains the case that passing assets directly to children or other beneficiaries on first death, rather than passing assets between spouses or civil partners, can be beneficial for tax purposes. It can secure APR or BPR passing assets down generations at an earlier point.

How to prepare before April 2026

Although the changes are a few months away, early preparation is essential. The following steps can help protect your position:

1. Review your Will and estate plan

If your Will relies on the current APR/BPR rules, we can help you assess whether it will still achieve the outcomes you intend once the new allowance is introduced.

2. Undertake an asset audit

We can work alongside your chosen financial adviser or land agent to identify which assets currently qualify for relief and their potential exposure post-2026.

3. Update business structures

Mixed-use or diversified businesses may need to revisit how their commercial and non-commercial activities are organised to optimise reliefs available.

4. Plan for liquidity

If your estate could face a higher IHT bill, you can explore ways to ensure funds are available to meet the liability without forcing the sale of essential assets such as farmland or business property.

Additional considerations

• Transferable allowances for spouses and civil partners.

Following the Autumn Budget 2025, any unused part of the £1 million relief allowance can now be transferred to a surviving spouse or civil partner, even if the first death occurs before 6 April 2026. This means many couples will still have access to up to £2 million of assets qualifying for 100% relief.

• Existing claims should remain unaffected.

Reliefs claimed on deaths before April 2026 will continue under current rules, but deaths after this date will fall under the new allowance and 50% relief structure.

• Trusts may still qualify in some cases.

Certain Trust structures will continue to attract Agricultural or Business Property Relief, but the overall allowance will apply. Taking early advice will help determine whether your arrangements remain efficient.

Key takeaways for business and farm owners

• From April 2026, Agricultural and Business Property Reliefs will operate under a single £1 million per person 100% relief allowance, with 50% relief on qualifying assets above this level.
• The allowance can now be transferred between spouses and civil partners.
• Estates holding high-value agricultural or business assets could face larger Inheritance Tax liabilities.
• Farmers, business owners and property investors should review their estate plans now.
• Early advice will help you protect the value of your estate and make the most of existing reliefs before the changes take effect.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.