On Tuesday 23 December, the government announced a significant increase in the Agricultural and Business Property Relief (ABPR) thresholds. Starting from April 2026, the individual threshold will rise from £1 million to £2.5 million, enabling spouses or civil partners to pass on up to £5 million in qualifying agricultural or business assets before inheritance tax applies.
This major policy revision comes after extensive feedback from the farming sector and rural businesses, prompting officials to rethink the reforms announced in Budget 2024. The government acknowledges the concerns and has responded by expanding protections for more farms and businesses, while still ensuring that the relief targets only the most valuable estates.
The changes will be incorporated into the Finance Bill set for January and will take effect from 6 April 2026. By raising the threshold, the government aims to drastically reduce the number of farms and business owners who will face increased inheritance tax bills, halving the number of estates impacted by the reforms.
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Environment Secretary Emma Reynolds emphasized the government’s commitment to supporting British farming, saying, “Farmers are at the heart of our food security and environmental stewardship. We have listened to their concerns and are increasing the threshold to protect more family farms. Couples with estates valued up to £5 million will now be exempt from inheritance tax on these assets.”
This change strikes a balance, ensuring that while larger estates contribute appropriately, family farms and key rural businesses receive the protection they need to thrive and sustain Britain’s rural communities.