Inheritance tax threshold more than doubles for farmers and businesses

The Agricultural and Business Property Reliefs threshold is to increase from £1m to £2.5m – allowing spouses or civil partners to pass on up to £5m in qualifying agricultural or business assets between them.

Following the reforms to Agricultural and Business Property Reliefs announced at Budget 2024, the government says it has listened to concerns of the farming community and businesses about the reforms.

It is now seeking to protect more farms and businesses, while maintaining the core principle that the most valuable agricultural and business assets should not receive unlimited relief. The change will be introduced to the Finance Bill and will apply from 6 April 2026.

Raising the threshold will significantly reduce the number of farms and business owners facing higher inheritance tax bills under the reforms, ensuring that only the largest estates are affected. 

The announcement will halve the number of estates claiming Agricultural Property Relief (including those also claiming Business Property Relief) who are affected by the reforms – better targeting the relief.  

As a result:  

• The number of estates claiming agricultural property relief (including those also claiming business property relief) affected by the reforms in 2026-27 halves from 375 to 185.
• Most estates will benefit, with inheritance tax cut by hundreds of thousands of pounds for many families.  
• The number of estates affected by the reforms claiming only business property relief – excluding those holding only AIM shares – will fall by a third.

To deliver this, the government will introduce an amendment to the Finance Bill 2025 to:  

• Increase the threshold at which 100% Agricultural Property Relief and Business Property Relief applies from £1 million to £2.5 million per estate, with 50% relief continuing to apply to qualifying assets above that level.  
• Given the allowance will be transferable between spouses, a surviving spouse or civil partner will be able to pass on up to £5 million of qualifying agricultural and business assets tax-free, on top of existing nil‑rate bands.  This will apply to people who are widowed and have lost spouses or civil partners before the policy was introduced.   

Please contact us 020 8290 0333 or email info@judge-priestley.co.uk if you would like more information about inheritance tax planning or wills and probate.