Taxing times: How inheritance tax on farms is changing

The recent UK budget announcement on changes to Agricultural Property Relief (APR) and Business Property Relief (BPR) has sparked both concern and anxiety amongst the farming community. 

For many, these reliefs often make the difference between keeping the farm in the family or being forced to sell part—or all—of it to cover tax liabilities. Under current proposals, from April 2026, farms and farming business assets will be subject to a £1m combined cap of 100% relief, with values in excess of this amount only benefitting from 50% relief. This represents a significant shift that could reshape the way families plan for the future.

The Government claims the changes are intended to "close loopholes" and "modernise" tax relief so that APR and BPR primarily support genuinely active businesses and farms, saying that 40% of APR had been going to "the 7% wealthiest claimants". However, this figure is being disputed, with DEFRA putting forward figures showing that changes would have an impact on 66% of farming estates.

Safeguarding family legacies

For an industry where generational knowledge and continuity are often integral to future success, what can farmers do, in light of these changes, to safeguard their family legacy?

For farming families, this may mean new decisions to keep their businesses active and demonstrate hands-on involvement to maintain eligibility for these reliefs. It could also lead to increased operational costs and pressure to demonstrate productive use of farmland, which could impact the overall business strategy, especially for smaller farms or those with less labour.

Strain on family farms

While the changes promise to address misuse, there is a worry about how smaller farms and family businesses, already under strain from rising costs and labour shortages, will adapt to these new criteria. Whilst we can recognise the need for fair taxation and targeted support, it seems the Government’s approach isn’t as nuanced as they believe. 

A recent poll by the Country Land and Business Association found over 86% of farmers said it was ‘likely’ that some or all of their land would have to be sold upon their death if inheritance tax reliefs were scrapped. 

As April 2026 draws closer, farming families will need guidance and clarity on what these reforms really entail and how best to prepare. After all, farms and businesses are not just assets—they are livelihoods and legacies. And inheritance tax is essentially voluntary. To speak to someone about what you need to be doing to prepare, contact Tim Boardman on  0191 211 7976  or email [email protected].