APR and BPR update: Government delivers early Christmas present for farmers and business owners

The Government has today (23 December) announced a significant and welcome change to its much-criticised proposals relating to Agricultural Property Relief (APR) and Business Property Relief (BPR).

Following sustained pressure from the farming community and family-owned businesses, the Government has confirmed that the proposed combined agricultural and business property allowance that benefits from 100% relief will be £2.5 million instead of the £1 million initially announced, with effect from 6 April 2026.

This means that married couples and civil partners will be able to pass on up to £5 million of qualifying agricultural and business assets with 100% relief from inheritance tax (IHT). Assets exceeding this new threshold will benefit from 50% relief and be subject to IHT at an effective rate of 20%.

This announcement represents a dramatic shift from the original proposals, which had caused widespread concern across the rural and family business sectors. The increased allowance will provide greater certainty and flexibility for succession planning and is likely to ease fears of forced asset sales or business fragmentation on death.

However, despite this welcome development, the new regime will still require careful forward planning, particularly for larger estates and businesses and those with significant non-relievable assets or complex ownership structures. The period leading up to April 2026 presents an important opportunity to review existing ownership structures, wills, partnership arrangements and succession strategies, with the window for some planning opportunities still closing on 5 April 2026.

In addition to the balance and complexity of individual factors which make almost every case unique, there is still uncertainty over the drafting of the legislation, whether the previous unlimited reliefs will be reinstated by a subsequent government, and what a less benign tax regime might mean for business and land values.

Farming estates and family-owned businesses wishing to understand how these changes will affect them, and what steps they should consider taking now, are encouraged to contact our specialist team for tailored advice.

Please get in touch with your usual Kreston Reeves contact or a member of our team here.