Agricultural Property Relief (APR) is big news following the recent budget. Prior to the budget APR applied 100% relief from Inheritance Tax for qualifying agricultural land and buildings. From 6th April 2026, a threshold of £1 million will be introduced for APR. In essence the new regime means that any agricultural assets in an estate up to a value of £1 million will remain free from Inheritance Tax and thereafter the effective tax rate for those assets will be set at 20% (half the current Inheritance Tax rate). APR has been a crucial tax relief for farming families. The true impact of the changes is yet to be felt but it marks a watershed in how central Government views farming and perhaps food security moving forward.
Two aspects of what is proposed stand out to us. The first being that the £1 million of relief will be applied proportionally across agricultural and business property where the total value of the qualifying property is more than £1 million. For example, if the estate owns £1.2 million of assets that qualify for APR or Business Property Relief, then £200,000 will be charged at 20% as this is 50% of the current Inheritance Tax rate and therefore £40,000 of Inheritance Tax will be due. The second being that as the cap of £1 million allowed at the full 100% relief is not transferable between spouses, detailed planning will be required to ensure that no allowance is wasted.
Detailed legislation is due in early 2025 to clarify the new rules and their application and Beers will be holding an open seminar to discuss how best to plan in light of these. We will publish more details of this early next year. If you would like to discuss this further please contact our Private Client team on 01548 857000 or at info@beersllp.com
