Agriculture and Business Property Relief

Just over a year ago, we analysed the October 2024 budget changes that sent shockwaves through the farming and business community. Namely, the introduction of a cap on Agricultural Property Relief (APR) and Business Property Relief (BPR). 

At that time, the government proposed a £1 million cap per individual on 100% inheritance tax (IHT) relief for qualifying agricultural and business assets. Any value above that would only receive 50% relief rather than full exemption, as had previously been the case.

Since then, and perhaps unsurprisingly, the political winds have shifted once again. In a last-minute announcement just before Christmas 2025, the Treasury confirmed that the APR/BPR cap will be increased from £1 million to £2.5 million per individual from 6 April 2026.

This means that, in practice, a married couple could potentially protect up to £5 million of qualifying agricultural or business assets at the full 100% relief rate, provided those assets are appropriately structured and continue to meet the qualifying conditions. 

The Government says it made this change after “listening carefully to feedback” from farmers, family businesses, and professional advisers, with the new limits included in amendments to the forthcoming Finance Bill. 

While this may feel like a win, in the context of ever-changing rules and inconsistent policy signals, it’s also an uneasy one. Many taxpayers are now left wondering whether future changes might undo today’s planning.

So, is it time to breathe easy and postpone estate planning? Not quite.

A pattern of flip-flopping

These changes follow a clear pattern in recent tax policy: bold announcements followed by partial reversals. 

The initial £1 million cap was met with fierce resistance – farming organisations estimated the reforms would impact 75% of commercial farms, far above the Treasury’s broader estimate of 27%. Yet the original measures have already triggered a wave of early restructuring, asset transfers, and succession reviews.

We have many clients who were impacted by the earlier restrictions and had already made significant changes based on the original £1 million cap. Some moved assets earlier than planned, while others started reconsidering the use of trusts, or even contemplated selling land to avoid future tax traps. 

These were not small decisions and involved:

• Complex valuations
• Intergenerational conversations
• Professional time and advisory input

Now, with the revised cap, many are asking whether they acted too soon or if they should undo their planning altogether. 

It has become increasingly clear that reacting emotionally to announcements – instead of building long-term, resilient strategies – can create more problems than it solves. Unfortunately, estate planning based on today’s headlines could be redundant by tomorrow’s ministerial statement.

Planning amid uncertainty

While the increased allowance will reduce IHT exposure for many families, especially those with diversified agricultural or business interests, the principle behind the change remains: reliefs are no longer unlimited. In reality, this signals a long-term shift in policy. 

Even if the thresholds have changed just recently, the message from the Treasury is clear: they are still targeting the most prominent estates and seeking to curtail the extent of reliefs previously taken for granted. 

Add to that the forestalling rules introduced in October 2024, and the situation becomes even more complex. Any lifetime transfers made on or after 30 October 2024 will be subject to the new capped reliefs if the donor dies on or after 6 April 2026. This effectively closes the door on many traditional planning strategies.

We’ve also seen increasing complexity in asset qualification, particularly in mixed-use or diversified operations involving clients. Some of the common problem areas include:

• Differentiating trading assets from investment holdings
• Proving agricultural use versus commercial letting
• Classifying diversified ventures (such as wind farms or events) under existing relief categories

For farming families and business owners who are often asset-rich and cash-poor, this can create a liquidity crisis – particularly if land or equity needs to be sold to meet a tax bill. With rising land values and often static incomes, understanding your exposure and planning accordingly has never been more critical.

Why you still need to act now

Even with the more generous cap, early planning remains essential to your long-term strategy. This is not just about reacting to changes, but getting ahead of them. 

Clients who engage in proactive planning today have a much stronger chance of preserving wealth, avoiding unnecessary disputes, and reducing stress later on.

Here are just a few key areas to review with your adviser:

• Reassess ownership structures: Are assets held in the most tax-efficient way?
• Review and document qualifying use of assets: Can you demonstrate that your land or business meets HMRC criteria?
• Reconsider trust arrangements: Have older trusts been reviewed in light of new thresholds?
• Evaluate succession plans: Are the right people lined up to inherit, and are they ready?
• Address liquidity options: Would your estate be able to fund a tax bill without needing to sell key assets?

These questions aren’t hypothetical; they are the day-to-day discussions we are having with clients who want to ensure their affairs are robust. 

With the revised APR/BPR rules and the likelihood of further change, the earlier you start preparing, the more options you’ll have available.

It’s also critical to understand that not all assets will qualify under APR or BPR. Consequently, diversification has become a common risk area, and we frequently help clients navigate HMRC scrutiny over:

• Commercial activities such as wind farms and solar projects
• Furnished holiday lets
• Contracting and non-core agricultural services

These are precisely the sorts of grey areas that require a deeper, evidence-based review before assuming tax relief is secure.

Don’t wait for another U-turn

There will be a temptation to wait and see what happens next, which is understandable, but that’s a risky approach. While the move to £2.5 million is positive, further potentially detrimental changes could be just around the corner. 

Whatever happens, the direction of travel is clear: restrictions are tightening, complexity is increasing, and assumptions of total relief are no longer safe. This isn’t doom and gloom; it’s about staying prepared.

Tax policy has become more reactive in recent years, with consultations, revisions and late-stage amendments becoming the norm. Against this backdrop, estate planning should be seen less as a one-time event and more as a long-term, evolving strategy. Regular reviews, timely adjustments and transparent family discussions will be more important than ever.

At Wilkins Southworth, we’re already working with clients to:

• Model future tax scenarios
• Review asset qualification under the new guidance
• Prepare supporting documentation for relief claims
• Update governance and succession strategies

Whether it’s taking advantage of current allowances or planning for future changes, the message is clear: don’t leave it too late. A well-timed conversation today could prevent a crisis five years down the line. 

Let’s make sure you’re planning ahead, not playing catch-up.

Talk to us

If you’re unsure how the APR/BPR reforms might affect you – or if you’ve already made planning decisions based on the previous £1 million cap – contact us. Our team can help you reassess your position and navigate the evolving landscape with confidence.

We understand that these are emotional and practical issues, not simply technical or regulatory challenges. Preserving your legacy, protecting family harmony, and securing long-term business continuity are all part of the conversation. That’s why our approach is tailored, forward-thinking, and designed to offer clarity in uncertain times.

For more background on the original reforms, see our December 2024 article: Navigating the 2024 Reforms: Understanding Agricultural and Business Property Reliefs.