Government Boosts Farming Inheritance Tax Threshold to Support Family Farms

On Tuesday, 23 December, the government announced a significant change to the Agricultural and Business Property Reliefs (APR and BPR) thresholds. Starting from April 2026, the threshold will increase from £1 million to £2.5 million. This adjustment means that spouses or civil partners can now jointly pass on up to £5 million in qualifying agricultural or business assets before any inheritance tax is applied, providing much-needed relief to farming families and rural businesses.

This change follows extensive feedback from the farming community and business owners, who expressed concerns over the initial reforms proposed in Budget 2024. In response, government officials reviewed the input carefully and decided to extend relief protections. The revised threshold seeks to protect more farms and businesses while ensuring that the largest, most valuable estates do not receive unlimited tax relief.

The updated threshold will be included in the Finance Bill introduced in January and will take effect from 6 April. Officials estimate that this adjustment will halve the number of estates impacted by the Agricultural Property Relief changes, allowing relief to better target genuine family operations.

Environment Secretary Emma Reynolds emphasized the government’s commitment to supporting farmers, stating, “Farmers are at the heart of our food security and environmental stewardship. We have listened closely to their concerns and are increasing the individual threshold from £1 million to £2.5 million. This means that couples with estates valued at up to £5 million will not face inheritance tax. It’s a balanced approach—larger estates will still contribute more, while protecting the farms and businesses that underpin Britain’s rural communities.”

This move aims to secure a profitable and sustainable future for British agriculture by easing the tax pressures on family-run farms and trading businesses.