Tax Planning for Farmers Under the 2026 Agricultural Property Relief Reforms

The government has proposed major reforms to Agricultural Property Relief (APR) and Business Property Relief (BPR) from 6 April 2026. These measures remain at the consultation stage, so details could change, but they are likely to reshape succession planning for farming families. At Apex Accountants, we support farmers with inheritance tax, estate planning, and succession strategies tailored to the agricultural sector. Our experience means we can help clients prepare for both the current rules and any future changes. Careful tax planning for farmers will be essential under these proposed reforms. This article outlines the changes, explains the risks for farming estates, and highlights practical steps to consider ahead of 2026.

What Is Changing in 2026?

Based on current government announcements, the proposed reforms include:

• The first £1 million of APR/BPR-qualifying assets per estate to receive 100% relief.
• Any value above £1 million to receive only 50% relief.
• The allowance is to apply per person and not be transferable between spouses.
• Unlisted shares, including AIM shares, will qualify for 50% relief only and will not benefit from the £1 million allowance.
• Trusts will face the same £1 million cap on qualifying assets for ten-year periodic charges and exit charges.

If enacted, these changes will significantly alter how farming estates are passed down, especially those exceeding the £1m threshold. Many landowners are already reviewing their position to understand how the proposed rules on Agricultural Property Relief 2026 could impact succession.

Key Risks for Farmers

• Estates above £1m could face an effective inheritance tax for farmers at around 20% on the excess.
• Families may need to sell farmland or business assets to raise funds.
• Relief could be wasted if both spouses’ allowances are not used effectively.
• Trust planning may become more complex under the new rules.

Practical Tax Planning Steps

1. Get Your Farm Valued

Obtain an accurate valuation of farmland, farmhouses, buildings, and machinery to assess exposure under the proposed cap.

2. Review Wills and Ownership

Consider revising wills to use both spouses’ allowances fully. Options such as life interest trusts may help secure relief. Careful will planning is one of the most effective ways to manage inheritance tax for farmers while making sure allowances are not wasted.

3. Consider Lifetime Transfers

Gifting before April 2026 could benefit from the current unlimited relief regime. However, the seven-year rule still applies.

4. Check Trust Structures

Trusts set up before 30 October 2024 may have their allowance under the transitional rules. Later, trusts will share a single cap.

5. Plan for Cashflow

Even with APR, tax may still arise. Farmers should consider:

• HMRC’s instalment option over ten years.
• Life insurance to cover liabilities.
• Cash reserves to avoid forced land sales.

6. Maintain Qualifying Use

APR depends on genuine agricultural use. Land held for development or non-farming purposes may lose relief.

7. Explore Business Restructuring

Review business structures, such as partnerships or companies, to see if they offer better flexibility under the new rules.

8. Consider Diversification Impacts

Diversification into non-farming activities (e.g., tourism, renewable energy) may limit APR eligibility. Assess each activity’s tax treatment carefully.

9. Monitor Proposed Legislation

The reforms are still proposals. Keep updated on government announcements, as final rules may change before April 2026.

10. Seek Professional Advice Early

Specialist guidance is vital to model tax liabilities, protect family assets, and take advantage of opportunities before the reforms take effect.

How Apex Accountants Supports Tax Planning for Farmers

The reforms are still proposals, but they are expected to take effect in April 2026. Early action can help families prepare for the potential impact. At Apex Accountants, we are already reviewing estate structures, trust arrangements, and lifetime transfers for farming clients so they are ready whichever form the final legislation takes. With expertise in succession planning and the proposed rules on Agricultural Property Relief 2026, we can provide guidance that fits your unique circumstances.

Start planning today. Waiting until the rules are finalised may limit your choices.

Contact Apex Accountants for tailored tax planning advice and protect your family’s farming legacy.