The government’s proposals to change the rules for APR and BPR (agricultural property relief and business property relief) are due to come into force in April 2026 and would have seen an effective tax rate of 20% on agricultural assets valued over £1 million.
Today’s announcement sees that threshold raised to £2.5 million. This is on top of the change to the spousal transfer allowance, announced by the Chancellor at the most recent Autumn Budget, which will allow those farmers who are married, or have deceased spouses or civil partners, to transfer their inheritance tax allowance to one another if one of them dies having not used their allowance, meaning they will be able to pass on up to £5 million in qualifying agricultural or business assets between them.
The change will be introduced through an amendment to the Finance Bill, with 50% relief continuing to apply to qualifying assets above the new threshold.
Government has listened
“Changes to Agricultural Property Relief and Business Property Relief announced in last year’s Budget came as a huge shock to the farming community,” Tom continued. “Until that moment, the best tax planning advice was to hold on to your farm until death and pass it on to the next generation who could continue to run a viable farming, food producing business.
“The original changes to APR and BPR, contained within the Finance Bill, resulted in a pernicious and cruel tax, trapping the most elderly and vulnerable people and their families in the eye of the storm. The NFU and its members have stood strong for what we believed in.
“I am thankful common sense has prevailed and government has listened. I have had two very constructive meetings with Prime Minster Sir Keir Starmer and dozens of conversations with Defra Secretary of State Emma Reynolds. She has played a key role underlining the human impact of this tax.
“These conversations have led to today’s changes which were so desperately needed. From the start the government said it was trying to protect the family farm and the change announced today brings this much closer to reality for many. I’d like to thank the Prime Minister for recognising the policy needed amending and the Chancellor for bringing in the spousal transfer in the Budget. Combined, this is a significant change.”
Announcing the news, Defra Secretary Emma Reynolds said: “Farmers are at the heart of our food security and environmental stewardship, and I am determined to work with them to secure a profitable future for British farming.
“We have listened closely to farmers across the country and we are making changes today to protect more ordinary family farms.” She added that it was “only right that larger estates contribute more”.
