APR and BPR changes in 2026 – what ‘farm tax’ changes mean

From 6th April 2026, significant changes to Agricultural Property Relief (APR) and Business Property Relief (BPR) will come into force. If you own a farm, a family trading business, or you hold business assets personally, the changes to the so-called ‘farm tax’ could affect how much Inheritance Tax (IHT) your estate pays. The APR and BPR changes could also affect your succession planning.

The Government has now confirmed a more generous position than originally proposed: a £2.5 million allowance at the 100% rate of relief, with 50% relief above that.

In this article, we explain what’s changing, what it could mean in practice, and what sensible steps to consider next.

Quick summary: what’s changing?

From 6th April 2026:

• 100% APR/BPR will apply only up to a new combined £2.5 million allowance per person for both agricultural and business assets.
• Above £2.5 million, qualifying assets will receive 50% relief, meaning they can face IHT at an effective rate of up to 20%.
• Any unused portion of the £2.5 million allowance can be transferred to a surviving spouse/civil partner, potentially letting a couple pass on up to £5 million of qualifying assets at 100% relief on the second death.

These APR and BPR changes sit alongside the normal IHT nil-rate band (£325,000) and other reliefs/exemptions (including the spouse exemption).

What are APR and BPR?

• APR (Agricultural Property Relief) reduces IHT on certain agricultural property, such as farmland and other qualifying property.
• BPR (Business Property Relief) is the equivalent relief for certain business assets within an estate.

APR and BPR are detailed and highly fact-specific. Qualifying conditions still matter as much as the headline numbers.

The £2.5m allowance: how it works

The Government’s published guidance explains that:

• The first £2.5 million of qualifying agricultural / business property can receive 100% relief.
• Anything above that threshold receives 50% relief, producing an effective IHT rate of up to 20% on that slice.

It’s also worth noting that the guidance says that IHT on affected assets can be paid in equal instalments over 10 years, interest-free.

Spouses and civil partners: up to £5m at 100% relief

The Government has now confirmed that the £2.5 million allowance is transferable between spouses / civil partners if unused when the first person dies.

That’s why you’ll see the “up to £5 million IHT-free” message for couples – it reflects two £2.5m allowances, not a brand-new £5m single allowance.

It’s also stated that where the first death was before 6th April 2026, it will be assumed the full allowance is available for transfer to the survivor.

What this means in practice

The Government’s own examples show how this can work when combined with other allowances (notably the nil-rate band). For example, it states a farm owned by a married couple/civil partners could potentially be passed on tax-free up to £5.65m when you combine two nil-rate bands (£650k) with two £2.5m allowances (£5m) – subject to the facts and other rules (for example, residence nil-rate band tapering is separate).

However, please note that this is an illustration. Real-life outcomes depend on:

• what qualifies for APR/BPR (and at what rate)
• ownership structure
• debts and valuations
• lifetime transfers
• wills and succession planning.

Where you could get caught out by APR / BPR changes

Even with the higher £2.5m threshold, the “risk areas” haven’t gone away. Problems may include:

• Assuming assets qualify automatically. Eligibility still depends on the nature of the property/business and the detailed conditions.
• Leaving planning too late. The APR / BPR changes  will take effect on 6th April 2026. Some aspects will interact with earlier dates and the transitional rules in the Government’s reform documents.
• Valuation and evidence. In cases where only 50% relief is available above the allowance, valuations can materially affect the IHT bill (and therefore funding / instalment planning).
• AIM Shares. From 6th April 2026, certain “not listed” shares (including AIM-type shares) will only receive 50% BPR, and their treatment was unaffected by the £2.5m threshold change.
• The ‘7-Year Rule’ and Lifetime Gifts (PETs). Don’t assume that gifting assets before the April deadline will “lock in” the old, unlimited relief. Under anti-forestalling rules, if you have gifted farm or business assets at any point since 30th October 2024, those gifts will be “pulled back” into your estate if you pass away after 6th April 2026 (and within 7 years of the gift). They will then be subject to the new £2.5 million cap. However, if you live for between three and seven years after making the gift, Taper Relief can still reduce your tax bill on a sliding scale.

Next steps

If APR/BPR is relevant to you, it’s worth taking a structured look now:

1. Confirm what you own, and how it’s owned (personally, jointly, via a company, via a trust).
2. Identify what is likely to qualify for APR/BPR and what may not (and why).
3. Model the threshold impact (what falls within £2.5m / £5m for couples, and what sits above).
4. Review Wills and succession plans to make sure they still do what you think they do under the new regime.
5. Plan for liquidity if any value may be exposed to IHT and consider the option of instalments where applicable.

How THP can help with the APR / BPR changes

If you’re unsure how to respond to the APR / BPR changes, talk to THP. We’ll help you make sure that the right assets qualify, that your ownership structure supports your aims, and your succession plan is fundable and workable for the next generation.

For advice and help, get in touch today. One of our friendly, expert accountants would be delighted to help you.