Inheritance tax latest news: what the new IHT changes mean for farmers and family businesses
The big inheritance tax (IHT) news this winter is all about relief for farming families and family-run businesses.
On 23 December 2025, the UK government confirmed a key change to how Agricultural Property Relief (APR) and Business Property Relief (BPR) will work from 6 April 2026. This update follows feedback from rural groups and MPs after the 2024 Budget. Source: gov.uk.
What exactly has changed?
Under the new rules:
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The threshold for 100% IHT relief on qualifying agricultural and business assets will increase from £1 million to £2.5 million per estate.
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Because the allowance is transferable between spouses and civil partners, a couple could now pass on up to £5 million of qualifying assets free of inheritance tax, on top of other allowances.
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Assets above that £2.5 million level will still qualify for 50% relief.
This change is set to take effect from April 2026 and will be included in the Finance Bill early next year.
Why this matters
Earlier proposals for inheritance tax reform had raised concerns that ordinary family farms and small trading businesses could face higher tax bills just as ownership passed to the next generation. These latest changes soften that impact.
Under the updated approach:
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The number of farming estates affected by the reforms is expected to fall significantly.
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Around 85% of estates claiming APR are forecast to pay no additional inheritance tax.
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Many families could see tax savings running into hundreds of thousands of pounds.
Relief continues at 50% on qualifying assets above £2.5 million, preserving support for farming while ensuring very large estates still pay their share.
What this means for planning
Even with this welcome update, careful planning is still valuable, especially if your estate is near or above the new thresholds. It’s sensible to:
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Review wills and succession plans
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Check ownership structures and how spousal exemptions are used
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Model inheritance tax exposure based on the new limits
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Revisit any planning you accelerated following Budget 2024
These steps help ensure you’re making decisions that fit your situation under the updated rules.
If you’d like to talk about what this means for your farm or business, Luke Prout, Tax Partner at Cottons Group, can help with planning and reviews in the New Year.
FAQ – Inheritance tax latest news
Q: When do these inheritance tax changes apply?
A: The new thresholds come into force from 6 April 2026 and will be included in the Finance Bill early in 2026.
Q: Who benefits most from the change?
A: The biggest beneficiaries are farming families and owners of qualifying business assets whose estates fall between the old (£1m) and new (£2.5m) thresholds. Couples can use transferability to increase that to £5m.
Q: Does this mean no one pays inheritance tax anymore?
A: No — estates above the threshold will still pay tax. Relief above £2.5m continues at 50%, and other rules like the nil-rate band still apply.
Q: Should I rewrite my will now?
A: It’s sensible to review your will and succession arrangements in light of the changes. Depending on your situation, adjustments might make sense. Talking to an adviser early in 2026 can help clarify this.
Q: What if my estate includes both farm and non-farm assets?
A: The relief applies only to qualifying agricultural and business assets. You’ll need to look at how different parts of your estate interact for IHT. Professional planning can help here.
Official source for reference:
Inheritance tax reliefs threshold to rise to £2.5m for farmers and businesses – gov.uk news release (23 December 2025).
If you’re searching for clear advice on the latest inheritance tax changes, our tax team can help you understand how the new rules apply to your farm or family business.
