Government raises Agricultural and Business Property Relief threshold to £2.5m following farmer protests

02 January 2026 | posted in Inheritance Tax planning

There was some good news for farmers and business owners over the festive period with the government’s announcement that the combined Agricultural Property Relief (APR) and Business Property Relief (BPR) thresholds will be increased to £2.5m from April 2026.

The changes to inheritance tax (IHT), first announced in the 2024 UK Budget, initially set out plans to limit the relief to £1 million. That proposal prompted strong opposition from the farming community, including protests and demonstrations across the UK, amid fears that family farms would face substantial IHT liabilities.

Under the revised rules, individuals will be able to claim 100% relief on combined qualifying agricultural and business assets up to £2.5m. Any value above this threshold will still benefit from relief, but at a reduced rate of 50%.

In practice, this means a married couple or civil partners could pass on a farm or business worth up to £5.65m before any inheritance tax is due. (This is made up of two £2.5m combined agricultural or business property relief allowances and two £325,000 nil rate bands.)

This will also apply to people who are widowed and have lost spouses or civil partners before the policy was introduced.

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