Rural uproar over inheritance tax modifications in Autumn Budget: what's the cause of protests by agricultural groups?
The changes to Agricultural Property Relief (APR) on inheritance tax (IHT), effective from April 6, 2026, will have significant implications for family farms and investors.
Currently, qualifying agricultural assets can benefit from 100% IHT relief without any upper limit. However, the new rules limit this full relief to only the first £1 million of combined qualifying Agricultural Property Relief and Business Property Relief assets. This means that up to £1 million of qualifying farm or business assets will still receive 100% relief, while any value above £1 million will only receive 50% relief, effectively subjecting that portion to a 20% IHT charge before the standard 40% tax rate applies on the remainder.
These changes will result in a much higher IHT liability for family farms or agricultural estates valued significantly above £1 million. For example, a farming couple’s estate worth £4.5 million could see a substantial increase in inheritance tax due under the new rules, which reduces relief and increases the effective tax rate on large estates.
These changes create planning challenges, particularly for owners of large farms and agricultural businesses who wish to pass down their assets without facing large tax charges. There is urgent pressure to seek professional advice to optimize estate planning before the changes come into effect, as the previous unlimited relief is removed.
Some MPs and stakeholders have called for delays to these changes due to concern about their impact on family farms and rural businesses that rely on inheritance tax relief to remain viable across generations. The changes are part of wider inheritance tax reforms, including frozen IHT thresholds until 2030 and changes to residency-based IHT liability for non-domiciled individuals, all increasing IHT exposure for many estates.
Rural campaigners accuse the government of breaking manifesto pledges to support farming communities by changing agricultural property relief. Many farmers, who are often asset-rich but cash-poor, will never actually realize the value from their land while they continue to farm it due to the changes. The cost of APR has surged by £335million or 105% since 2020 to £665 million.
The National Farmers Union (NFU) and other groups, along with independent farmers, have held protests across the country to raise concerns about the IHT changes. Sam Dewes, private client partner at HW Fisher, suggests that the proposals could be amended to only limit APR on death when the farm is sold afterwards to protect multi-generational farming families.
Investors in agricultural assets should also reassess their positions given the reduced relief and higher tax exposure beyond the £1 million threshold. The changes will affect 40% of farms when considering only bare agricultural land values, and could force farmers who hope to continue the business to sell up to pay for the tax.
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- The new policy-and-legislation regarding Agricultural Property Relief (APR) and inheritance tax (IHT) could dramatically impact one's personal-finance, particularly those with significant farm or business assets worth more than £1 million.
- Due to the reduction in the relief limit, family farms and agricultural businesses now face a higher inheritance tax liability, potentially forcing some to sell their property to pay the tax.
- The changes in APR have sparked concerns in politics, with some MPs and stakeholders accusing the government of going back on their manifesto promises to support farming communities.
- In light of these alterations, it is essential for investors in agricultural assets, as well as farm owners, to seek professional advice in their general-news and financial matters to optimize their estate planning, especially before the changes come into effect in April 2026.
