From 6 April 2026, 100% inheritance tax relief on farm and business property is capped at £2.5 million a person. Here is who qualifies, how let land is treated and which records back up a claim.
For deaths on or after 6 April 2026, agricultural relief and business relief give 100% relief on the first £2.5 million of qualifying property, combined, and 50% above it, an effective rate of up to 20% on the excess. Unused allowance passes to a surviving spouse or civil partner, so a couple can shelter up to £5 million. Gifts since 30 October 2024 count against it. As of October 2026 I found no later change. Tidy farm bookkeeping records support a claim. Take advice from your accountant and solicitor.
Until April 2026, agricultural property relief (APR) and business property relief (BPR) could take 100% off the taxable value of qualifying farmland and farm businesses, with no upper limit. For deaths on or after 6 April 2026, GOV.UK says the combined 100% relief is limited to £2.5 million. Qualifying value above that gets 50% relief, and because the standard rate is 40%, the effective rate on the excess is up to 20%.
The figure moved. The reform was announced at Autumn Budget 2024 with a £1 million limit. On 23 December 2025 the government raised it to £2.5 million, and it is now law in Schedule 12 of the Finance Act 2026. The Act also lets the allowance rise with the Consumer Prices Index, from 6 April 2030.
As of October 2026 I found no announcement of a further change to the threshold or to the spouse rule. Tax rules do move at Budgets, so check GOV.UK before relying on any figure here. Whether this touches your farm is a sum for your accountant and solicitor, and this guide is background, not advice.
The allowance is per person and covers agricultural and business property together. It counts qualifying property in the estate, qualifying gifts made on or after 30 October 2024 where the donor dies within seven years, and qualifying property in trusts. Lifetime gifts use it first, oldest to newest, and what is left is shared across the qualifying assets in proportion.
For spouses and civil partners, unused allowance can be transferred to the survivor, with a claim within four years of the survivor's death or six months of the personal representatives starting, whichever is later. If the first death was before 6 April 2026, the full £2.5 million is assumed available. With nil-rate bands, GOV.UK gives £5.65 million as the most two people can pass on tax free.
For illustration only: a single person with £4 million of qualifying farmland and no transferred allowance gets 100% relief on £2.5 million and 50% on the other £1.5 million. That leaves £750,000 taxable, and 40% of that is £300,000, before any nil-rate band.
Tax on property that qualifies can be paid in equal instalments over 10 years, interest free.
The farmhouse is where families get caught. Relief is on agricultural value only. The house must suit the farming in size and nature, and it is valued as if it could only be used for farming. What a buyer would pay above that, for a country residence, does not qualify.
There are time tests as well. The land must have been owned and occupied for agriculture for two years where the owner, their company or their spouse occupied it, and seven years where someone else did.
Business relief covers a business or an interest in one, and it cannot be claimed on value already relieved as agricultural property. Which relief applies to which asset is a job for your advisers.
It matters a great deal. Under the GOV.UK guidance, the rate is 100% where the owner farmed the land, where it was used under a short-term grazing licence, or where it was let on a tenancy that began on or after 1 September 1995. Special rules cover some property owned before 10 March 1981. In all other cases the rate is 50%, which in practice mostly catches older tenancies.
Let land is also where the paperwork is thinnest. The HMRC manual says the form for agricultural relief asks how the land was occupied, including when tenancies began, and that short-term and grazing arrangements get particular attention.
What I would check first is whether every field let out has a written agreement with a start date. A handshake grazing arrangement that has run for fifteen years looks different to an inspector than it does to the two farmers. If the paper does not match what happens, put it right while everyone is alive to sign.
Day-to-day records do real work. In my judgement, livestock registers, movement reports and medicine records show animals were kept and managed, and invoices show the business was trading. Our guides on what HMRC expects you to keep and how long to keep farm records cover the basics.
For farm buildings, the HMRC manual says they must be used for agricultural purposes, and storage of redundant or non-agricultural equipment is unlikely to qualify. Where planning permission has been granted for conversion or change of use, the form asks for the details and the extent of actual farming use.
A barn let as holiday accommodation, a workshop let to a tenant and a yard let for storage each need looking at separately. Our guide to farm diversification tax and paperwork covers income tax and VAT. Land under environmental agreements is also listed by GOV.UK as qualifying, so keep the papers from scheme payments and agreements with the rest.
Start with the farm's accountant and a solicitor who knows agricultural property. Ask what the estate would be worth under the new limits, whether wills and ownership match how the farm is run, and what the plan is for the spouse's allowance. I would not move land or change a will on the strength of a web page, including this one.
Then sort the paper. Lifetime gifts need a date, a value and a recipient, because the apportionment calculation asks for exactly that. Tenancies need writing down. Livestock numbers and building uses need recording each year, not reconstructing. If you are weighing accounting methods, see cash basis versus accruals.
FarmHQ, the farm office app for UK cattle and sheep farms (in beta), keeps livestock, medicine and money records in one place, and Ask Farmer Joe drafts while you confirm. It does not replace your accountant or solicitor. See FarmHQ pricing for the cost.
For deaths on or after 6 April 2026, 100% agricultural and business property relief applies to the first £2.5 million of qualifying property combined. Above that, relief is 50%, an effective rate of up to 20%. The limit was raised from £1 million on 23 December 2025. Check GOV.UK for the current position.
Yes. Unused allowance can be transferred to a surviving spouse or civil partner, so a couple can pass on up to £5 million of qualifying assets, plus nil-rate bands. If the first death was before 6 April 2026, the full £2.5 million is assumed available. The claim has time limits, so ask your solicitor.
It can be. GOV.UK gives 100% relief for land the owner farmed, land under a short-term grazing licence, and land let on a tenancy that began on or after 1 September 1995. Other let land gets 50%. A written agreement with a clear start date is the sensible evidence to keep.
Only for its agricultural value. The house must suit the farming in size and nature, and any value above what it would fetch as farm-only property does not qualify. Farmhouses are a common area of dispute, so take advice early and keep records of who lives there and their farm role.
They can. Qualifying gifts made on or after 30 October 2024 count against the £2.5 million allowance if the donor dies on or after 6 April 2026 and within seven years of the gift. Keep the date, value and recipient of every gift, and tell your accountant.