Changes to Agricultural and Business Reliefs

Government review and amended position

Following the original announcements in the Autumn Budget 2024, the Government has reviewed the proposed changes to Agricultural Relief (AR) and Business Relief (BR). As a result of that review, the limits originally announced have been materially amended.

The Autumn Budget 2024 proposed that 100 per cent relief would be restricted to the first £1 million of combined qualifying agricultural and business property per individual, with 50 per cent relief applying above that level.

After consultation and industry feedback, the Government has increased this threshold. From 6 April 2026, 100 per cent relief will apply to the first £2.5 million of combined qualifying agricultural and business property per individual. Any qualifying value above £2.5 million will attract 50 per cent relief, resulting in an effective inheritance tax rate of up to 20 per cent on the excess.

The £2.5 million allowance will be transferable between spouses and civil partners. Where unused on first death, it can be claimed on second death in a similar way to the nil rate band. This means a couple may be able to pass on up to £5 million of qualifying agricultural and business assets with full relief, before considering other inheritance tax allowances.

The option to pay inheritance tax attributable to the 50 per cent relief portion by equal, interest free instalments over ten years will continue to apply.

The Government has stated that this amendment significantly reduces the number of estates affected compared with the original Budget 2024 proposal and is intended to focus the change on the largest estates.