In a landmark announcement on December 23, 2025, the UK government revealed plans to raise the Agricultural Property Relief (APR) and Business Property Relief (BPR) thresholds from £1 million to £2.5 million. These changes, set to take effect in April 2026, will offer significant tax relief to farmers and businesses, allowing spouses and civil partners to pass on up to £5 million in qualifying assets without paying inheritance tax. This increase in the inheritance tax relief threshold comes after extensive consultations with the farming community and business owners, ensuring that the revised thresholds better address the needs of family-run businesses while maintaining fairness across the tax system.
The increase in IHT allowances is part of the government’s commitment to making inheritance tax more equitable while ensuring that vital agricultural and business assets remain within families. Here’s a breakdown of the key changes:
From April 2026, the APR and BPR thresholds will rise to £2.5 million per estate. This allows couples to pass on £5 million of agricultural or business assets tax-free, on top of existing allowances, providing much-needed relief to family-run businesses and farms.
The inheritance tax threshold increase is expected to benefit smaller estates. By raising the threshold, the government aims to reduce the number of estates that are affected by higher inheritance tax bills. This shift ensures that only the largest estates will be subject to inheritance tax under the reforms.
Farming and small business sectors are vital to the UK’s economy, and this reform acknowledges the challenges these sectors face in passing businesses on to the next generation. The increase in thresholds will ensure that the tax burden remains manageable for family-run farms and businesses, allowing them to continue thriving without the fear of excessive inheritance tax obligations.
The changes reflect the government’s recognition of the importance of agriculture and rural businesses to local communities. By providing tax relief for smaller estates, the government is helping to preserve the legacy of family farms, which play a crucial role in food production and environmental management in the UK.
Apex Accountants understand the unique challenges faced by farmers, business owners, and their families when it comes to inheritance tax. Our expert team provides tailored advice to help ensure that your estate planning is as tax-efficient as possible. Here’s how we can assist:
This increase will significantly reduce the number of businesses that are subject to inheritance tax. By raising the threshold, more family-run businesses can pass on their assets without incurring additional tax bills.
Yes, while assets above the £2.5 million threshold will receive 50% relief, the majority of your estate will still benefit from the full 100% relief, ensuring your family business remains protected.
We offer comprehensive estate planning services, including inheritance tax advice, succession planning, and strategies to maximise the benefits of APR and BPR. Our goal is to ensure your assets are passed on efficiently and in compliance with tax laws.
The new rules will apply to widowed spouses or civil partners as well. If your spouse has passed away before the policy is implemented, you can still benefit from the increased threshold of £5 million.
The government’s announcement to increase the threshold for Agricultural and Business Property Relief marks a significant step forward in supporting small businesses and farms. These reforms will reduce the inheritance tax burden on family-run businesses, helping ensure their long-term success. At Apex Accountants, we are here to assist you with navigating these changes, ensuring that your estate planning is tax-efficient and meets your long-term goals. For further guidance on how these changes affect your business or farm, contact Apex Accountants today. Let us help you secure the future of your estate while minimising your tax liabilities.
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