Inheritance Tax Update: Agricultural and Business Property Relief Allowance Increased to £2.5 Million

In a surprise announcement, the Chancellor has confirmed a significant change to the planned reforms affecting Agricultural Property Relief (APR) and Business Property Relief (BPR). From 6 April 2026, the amount of qualifying agricultural and business assets that can benefit from 100% inheritance tax relief will increase substantially.

This update provides welcome reassurance for farmers, business owners and families planning for the long-term future of their estates.

What Has Changed?

Under the revised proposals:

• 100% inheritance tax relief will apply to the first £2.5 million of qualifying agricultural or business assets

• This is an increase from the previously announced £1 million allowance

• The relief applies to APR and BPR qualifying assets

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For couples, this change is particularly significant.

What Does This Mean for Couples?

Because the allowance can be transferred between spouses or civil partners, a couple can now pass on:

• Up to £5 million of qualifying agricultural or business assets free from inheritance tax

  
  

This is in addition to standard inheritance tax allowances, such as the nil-rate band and residence nil-rate band, where applicable.

Background to the Reform

The proposed changes to inheritance tax reliefs were first announced in the 2024 Autumn Budget. Since then, the government has made two amendments:

1. 2025 Autumn Budget:

   The new allowance was confirmed as transferable between spouses and civil partners.
   

2. Latest Announcement:

   The qualifying allowance has now been increased from £1 million to £2.5 million per individual.
   

These revisions significantly soften the original proposals and reduce the potential inheritance tax impact for many estates.

Impact on Estates

HM Treasury has stated that:

• The increase in the allowance will halve the number of estates affected by the reforms

• Around 85% of estates will pay no more inheritance tax than they would have done under the current rules
  

For many families, this restores confidence and flexibility in succession and estate planning.

Why Reviewing Your Estate Planning Matters

Even with this increase, inheritance tax planning remains complex. Factors such as asset structure, ownership, succession intentions and future legislative changes all play a role in determining exposure.

Reviewing your plans now can help ensure:

• Reliefs are maximised

• Assets are structured efficiently

• Family and business succession goals are protected

• Future tax risks are minimised
  

How SJC, Chartered Accountants Can Help

 At SJC, Chartered Accountants, we work closely with business owners, farmers and families to provide clear, practical advice on inheritance tax and succession planning.

If you would like personalised guidance on how these revised APR and BPR allowances may affect your estate, please get in touch. We would be happy to help you understand your options and plan with confidence.