Inheritance Tax Reforms: Business and Agricultural Property Relief

Inheritance Tax Reforms: Business and Agricultural Property Relief | Tuesday 24 March 2026 | 4 min read

In the 2024 Autumn Budget, the government announced reforms to two inheritance tax reliefs: Agricultural Property Relief (APR) and Business Property Relief (BPR). These changes have attracted a lot of media attention due to the impact on farmers who held several protests against the proposed reforms.

At present, there is no cap on the value of assets that can qualify for these reliefs, although eligibility depends on meeting the ownership requirements defined below.

Business Property Relief

The asset must be owned for a continuous 2-year period before the death of the owner. Spouses who inherit the asset will also qualify for this relief as long as the deceased spouse owned the asset for two years before their death. The spouse will be deemed to have owned the property from the date it was originally acquired by the deceased spouse, irrespective of how long they had been married.

There is 100% relief from inheritance tax for private company shares, partnership interests or sole trader businesses. The relief is reduced to 50% for quoted shares and for assets owned but used for business purposes. For example, this may apply to you if you have owned a company or were part of a partnership that owned plant or machinery for the sole use of your business.

Agricultural Property Relief

If you’re giving away or selling agricultural property, called a ‘transfer of value’, you need to have used it for farming purposes for 2 years immediately before this. However, if you’ve owned and used the property for farming purposes, or another person, such as a tenant to whom the property is let, then the period is 7 years.

The assets must be for genuine agricultural or trading purposes. The relief will not apply to assets used for investment purposes. An example here would be farmhouses, which can be genuinely part of a farm business or lived in as a home by someone who has nothing to do with farming.

Some assets, such as agricultural buildings, may qualify for both types of relief, but Agricultural Property Relief will be given priority, and an asset cannot be relieved by both.

The position after 6 April 2026

Following the reform, the relief from inheritance tax will be available at a rate of 100% for qualifying assets up to the value of £2.5 million per individual, after the government departed from their December 2025 announcement, where the value was set at £1 million. Any qualifying assets above this amount will attract relief at a lower rate of 50%.

The relief is transferable between spouses and Civil Partners, meaning that any unused portion can be transferred to the survivor, giving a total of £5 million in qualifying assets before inheritance tax becomes payable. The previous ownership requirements will still apply.

The new reform also means that only 50% relief will apply to shares in Alternative Investment Market (AIM) listed and Enterprise Investment Scheme (EIS) companies.

The allowance will operate on a seven-year rolling basis, much like the Nil Rate Band. When making a transfer on or after 6 April 2026, the individual must look back seven years from that date for other transfers which were relieved by Agricultural or Business Property Relief.

Impact on Inheritance Tax liabilities

The changes to Agricultural Property Relief and Business Property Relief mean that some estates may face higher inheritance tax bills. If a property or business does not meet the criteria, it might not qualify for full tax relief. This could lead to more tax being owed, especially for estates with mixed-use properties or businesses with significant non-trading activities.

Impact on estate beneficiaries

The changes may also impact beneficiaries of estates. If the estate has to pay more tax, there will inevitably be less money or fewer assets left to distribute. Beneficiaries might also face challenges if they need to sell assets quickly to cover the tax bill. It is important for estate plans to be reviewed and updated to reflect these changes.