Draft legislation confirms government changes to inheritance tax that threaten the future of many British farms. Farmers must urgently arrange to mitigate the impact for their families. Experts warn that effective strategies must focus on control of assets and income. The changes reduce agriculture property relief and business property relief, limiting previous tax exemptions. From April 2026, property over £1 million will receive only 50% relief, imposing a 20% tax on the estate's value, possibly forcing farm owners to sell land to cover tax liabilities.
The reduction in inheritance tax relief for agricultural land and assets could have a devastating impact on thousands of family farms, said Aloysia Daros, S&W Head of Landed Estates and Rural Businesses.
Now the waiting and uncertainty is over, farm owners need to address this urgently. But they must also ensure the strategies put in place will prove effective in limiting the impact of the inheritance tax changes.
The proposals...limit the 100% APR and BPR relief to the first £1 million of combined agricultural and business property. From April 2026, property above that value will only benefit from 50% relief.
They face paying 20% on the value of the land, regardless of the profits it's making or otherwise. With many farms facing a tough time, they may have to sell land to meet this liability.
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