APR and BPR changes will take place from April 2026. In a surprise move, just before Christmas, the government announced a significant change to the future treatment of Agricultural Property Relief (APR) and Business Property Relief (BPR) for inheritance tax purposes, offering welcome reassurance to both farming families and business owners.
Following widespread concern after the reforms outlined in the 2024 Budget, the government has confirmed that the 100% relief threshold will increase from £1 million to £2.5 million per estate, effective from 6 April 2026. This change will be introduced through an amendment to the Finance Bill in January.
The APR and BRP changes mean that spouses or civil partners will be able to pass on up to £5 million of qualifying agricultural or business assets between them without paying inheritance tax, in addition to the existing nil-rate bands.
This adjustment is expected to dramatically reduce the number of estates affected by the reforms:
The number of estates claiming APR that will face a higher inheritance tax bill in 2026/27 is forecast to fall by around 50%.
Around 85% of estates claiming APR (including those also claiming BPR) are expected to pay no additional inheritance tax as a result of the reforms.
Estates claiming only BPR (excluding AIM share portfolios) will also see a meaningful reduction in exposure, helping to simplify planning and reduce complexity.
For many families, this could mean inheritance tax savings running into hundreds of thousands of pounds.
How the revised relief will work.
Under the updated proposals:
- 100% APR and BPR will apply to the first £2.5 million of qualifying assets per estate.
- 50% relief will continue to apply to qualifying assets above this threshold.
- The allowance will be fully transferable between spouses or civil partners, including for those who were widowed before the policy comes into force.
Importantly, these reliefs continue to apply at a far more favourable rate than inheritance tax on most other asset classes.
Targeting the largest Estates
While the government has moved to protect more “ordinary” family farms and trading businesses, it has been clear that the core objective of the reforms remains unchanged: very large agricultural and business estates should no longer benefit from unlimited inheritance tax relief.
The revised approach aims to strike a balance supporting rural communities and food production, while ensuring the tax system is fairer and helps fund public services.
Wider support for Farming and Rural Businesses
This announcement sits alongside broader government initiatives, including:
The creation of a Farming and Food Partnership Board, bringing together leaders from farming, food production, retail, finance and government.
Changes to planning rules to make it easier for farms to expand, including simplified approvals for reservoirs, greenhouses, polytunnels and farm shops.
Together, these measures are intended to strengthen food security, encourage rural growth and support long-term business sustainability.
What should you do now?
Although the APR and BPR changes do not take effect until April 2026, they underline the importance of reviewing succession and inheritance tax planning early. Structures that were being reconsidered after the Budget in 2024 may now need a fresh look.
At bennettbrooks, our specialist tax advisory team works closely alongside our trusts and estates specialists to help farming families and business owners plan effectively for the future. By taking a joined-up approach, we support clients with succession planning, inheritance tax mitigation and the long-term protection of family wealth.
If you would like to discuss how these changes may affect your estate or business, please get in touch with our specialist team.
