2026 IHT changes: Why Red Book valuations are critical for agricultural landowners

With tax changes taking effect on 6 April, it’s a good time to review your IHT planning. Our featured article from Batcheller Monkhouse highlights the importance of accurate RICS Red Book valuations and HMRC compliant stocktaking to ensure you’re prepared for the upcoming reforms. 

Following the significant reforms to inheritance tax first proposed in the Autumn Budget in 2024 and due to take effect from 6 April 2026, accurate valuation and a solid understanding of your potential tax liability, has never been more important. These reforms mean that assets, enterprises, and stock that would previously have benefitted from reliefs may now fall within the scope of inheritance tax.

Understanding at an early stage what does and does not qualify for relief is essential and planning ahead will become even more important. Farming businesses can pay IHT in ten interest-free instalments however, to benefit from this provision, the first instalment must be paid by the end of the sixth month after death regardless of whether probate has been granted. Interest becomes payable on the instalment from the date the payment is due.

Red book valuation

Not all valuations are equal. When it comes to valuations for the assessment of the liability to capital taxation, be it Inheritance Tax or Capital Gains Tax, an estate agent’s market appraisal will not satisfy HMRC. Particularly as it relates to agricultural property. You will need a RICS Red Book valuation, a comprehensive, evidence backed report that adheres to the standards set by the RICS. Starting from a robust and defensible position is vital

Stocktaking valuation

For the first time in decades, the value of stock and machinery will be brought into the picture for inheritance tax purposes. These items could represent a significant proportion of IHT liability, and by extension the available relief allowance.

Unlike annual stocktaking valuations prepared for accounting purposes, the valuation of stock for tax purposes must reflect market value, which is often considerably higher.

Accurately assessing livestock, machinery, and other stock, demands meticulous recordkeeping and careful timing. Compiling the necessary evidence and producing a HMRC compliant report can be time consuming even when information is well organised.

Another often overlooked factor that can erode your relief allowance is the value attributed to agricultural tenancies. This element is commonly overlooked.

Next steps

To protect your inheritance tax position:

Keep your records organised, preferably digital, and clearly labelled, including invoices, stock lists, field records, and machinery details.

Speak to your advisors now, whether that is your tax advisor, solicitor, land agent, or ideally all three working together. They can help you understand your potential tax exposure and guide you through the best options.

Despite the recent changes, there are still effective strategies available, provided that you address them early on.

Get help with IHT planning

If you would like further information or guidance, please get in touch.