IHT on Farm/Agricultural Property After April 2026
⚠️ Autumn Budget 2024: From 6 April 2026, Agricultural Property Relief (APR) and Business Property Relief (BPR) are capped at a combined £1,000,000 at 100% relief. Above £1M, only 50% relief applies (effective IHT rate 20%).
Frequently Asked Questions
APR is an Inheritance Tax relief that reduces the taxable value of qualifying agricultural property. It provides 100% relief for owner-occupied or in-hand farming land, or 50% for tenanted agricultural property.
From 6 April 2026, the Government proposed a £1 million combined cap on 100% APR and Business Property Relief (BPR). Value above £1M would only receive 50% relief, creating an effective IHT rate of 20% on the excess.
Agricultural land and woodland, farmhouses (if occupied in connection with agricultural land), and some other agricultural buildings. The land must have been used for agriculture for 2 years (owner-occupied) or 7 years (tenanted).
The £1M cap applies to the individual estate. For a married farming couple, each spouse may have their own £1M cap — though HMRC's final rules may differ.
Agricultural property placed in trust before April 2026 under the old rules may still benefit from 100% APR. However, transfers may trigger lifetime IHT charges. Specialist advice is essential before April 2026.
BPR provides 100% or 50% IHT relief on qualifying business assets — unquoted shares, business interests, and some business property. From April 2026, the combined APR+BPR cap will limit total 100% relief to £1M.
Tenanted agricultural land (let on Agricultural Holdings Act tenancies or Farm Business Tenancies) typically qualifies for only 50% APR (not 100%). The Budget 2024 changes apply on top of this restriction.
A farmhouse qualifies for APR if it is 'of a character appropriate to the agricultural land' and is occupied as the farmer's home. Large, modern, or luxury farmhouses may not qualify or may receive partial relief.
Yes. APR is a UK-wide Inheritance Tax provision. The land must be used for agriculture in the UK, Channel Islands, or Isle of Man.
IHT on qualifying agricultural property can be paid in 10 annual instalments (interest-free if the property qualifies). This helps families avoid forced sales to pay IHT immediately.
Yes, but lifetime gifts of agricultural property may fall out of IHT immediately if APR applies. Gifts must survive 7 years to be fully exempt. If APR applied at the time of gift, they may be immediately exempt.
Review estate structure, consider whether transferring assets before April 2026 makes sense, explore trust structures, and take specialist agricultural tax advice urgently given the proposed changes.