APR and BPR Changes April 2026: What Families Need to Know About Inheritance Tax on Farms and Businesses

What Are APR and BPR?

Agricultural Property Relief (APR) and Business Property Relief (BPR) are two of the most valuable inheritance tax reliefs available in the UK. They can reduce or eliminate the inheritance tax bill on qualifying farms, agricultural land, and business assets.

For decades, these reliefs have allowed farming families and business owners to pass assets to the next generation without a crippling tax bill. But from 6 April 2026, the rules are changing significantly.

What's Changing from April 2026

The UK Government confirmed major reforms to both APR and BPR as part of the Finance (No 2) Bill 2025-26. Here's what you need to know:

The New £2.5 Million Threshold

• 100% relief now applies only to the first £2.5 million of combined qualifying agricultural and business property per individual
• Any qualifying value above £2.5 million receives 50% relief — meaning it's taxed at an effective rate of 20% (half the standard 40% IHT rate)
• This threshold was originally announced at £1 million in the October 2024 Budget, then increased to £2.5 million following sustained pressure from farming and business groups

Spousal Transfer

• Unused relief allowances can be transferred between spouses or civil partners
• This means a couple can potentially pass on up to £5 million in qualifying assets completely free of inheritance tax
• When combined with the nil-rate bands (£325,000 each plus the residence nil-rate band), a couple could shelter up to approximately £6.3 million

What Qualifies for APR

Agricultural Property Relief applies to:

• Agricultural land and buildings used for farming
• Farmhouses occupied by the farmer (proportionate to the agricultural use)
• Growing crops and harvested crops not yet sold
• Stud farms for breeding and rearing horses

The property must have been owned and occupied for agricultural purposes for at least 2 years (if farmed by the owner) or 7 years (if let to a tenant farmer).

What Qualifies for BPR

Business Property Relief applies to:

• A business or interest in a business (sole trader or partnership)
• Shares in an unquoted company (including AIM-listed shares)
• Land, buildings, or machinery owned by the individual but used in a partnership or company they controlled

The business must have been owned for at least 2 years before death. Investment businesses (property letting, investment holding) generally do not qualify.

Impact on Bereaved Families

If someone has recently died or dies after 6 April 2026 leaving a farm or business, the executor needs to understand:

1. Valuation is critical — Getting an accurate valuation of agricultural and business assets determines how much falls within the £2.5 million threshold
2. Combined cap — APR and BPR share the same £2.5 million allowance. A family with both a farm and a trading business must combine the values
3. The tax on the excess is real — At 20% effective rate, a farm valued at £4 million would face approximately £300,000 in inheritance tax on the amount above the threshold
4. Payment by instalments — IHT on business and agricultural property can often be paid in 10 annual instalments, easing the cash flow burden
5. Clawback rules — If the person who inherits sells the agricultural or business property within a certain period, the relief may be clawed back

What Executors Should Do Now

If you're administering an estate that includes agricultural or business property:

• Get a professional valuation from a qualified surveyor (for agricultural property) or business valuator
• Check the ownership period — relief requires a minimum holding period
• Review the structure — some planning may have been done using trusts or partnerships that affects how the relief applies
• Instruct a solicitor or tax adviser who specialises in agricultural or business IHT — the rules are technical
• Consider instalment payments if the tax bill is substantial

How GetPassage Can Help

Dealing with inheritance tax is one of the most complex parts of estate administration, especially when farms or businesses are involved. GetPassage helps you identify and manage all the practical tasks after a death — including flagging when specialist tax advice is needed.

Our task-based approach ensures nothing falls through the cracks during an already difficult time.

Further Reading

• HMRC guidance on Agricultural Property Relief
• HMRC guidance on Business Property Relief
• Government announcement on the £2.5m threshold