By Chandraketu Tripathi · Updated 6 April 2026 · Fact-checked Breaking · 6 April 2026One of the most controversial changes from the 2024 Autumn Budget takes effect today: from 6 April 2026, Agricultural Property Relief (APR) and Business Property Relief (BPR) at the full 100% rate are capped at £2.5 million per person. Above this threshold, qualifying assets attract 50% relief — an effective IHT rate of 20%. This marks the end of the unlimited IHT exemption that has protected family farms and businesses for decades.
Who Is Affected?The change primarily affects: farming families with agricultural land and buildings worth more than £2.5 million, owners of trading businesses valued above £2.5 million, investors in AIM-listed shares who held them for IHT planning purposes, and trusts holding qualifying business or agricultural property. The government estimates the change will affect approximately 520 farms per year and a larger number of trading businesses. Farm values have risen significantly in recent years — a 500-acre farm at £8,000-£10,000 per acre is worth £4-5 million, well above the £2.5 million cap. Key Protections RemainingDespite the caps, farming families and business owners retain significant advantages over other taxpayers. The £2.5 million cap per person is transferable to a surviving spouse or civil partner — giving couples a combined £5 million at 100% relief. Any IHT due above the cap can be paid in interest-free instalments over 10 years, unlike other IHT which must be paid within 6 months. The standard nil-rate band (£325,000) and residence nil-rate band (£175,000) still apply on top of the business relief. 💡 If you own a farm or business worth more than £2.5 million and have not yet taken professional advice on the IHT implications, act immediately. The change takes effect today. Options including family restructuring, trust planning, gifting strategies and life insurance to cover the liability all require time to implement properly. Contact a specialist agricultural or business tax solicitor or chartered accountant urgently. What About Lifetime Gifts Made Before April 2026?Assets transferred between 30 October 2024 (the Budget announcement date) and 5 April 2026 were assessed under the old unlimited relief rules at the time of transfer. However, if the original owner dies within seven years of the transfer, the new restricted relief rules will apply retroactively to those gifts. This 'look-back' rule means gifts made during this transitional period may face unexpected IHT if the donor dies before the seven-year period expires. ⭐ KEY TAKEAWAY The IHT change for farms and businesses from 6 April 2026 is one of the most significant tax reforms for rural and business communities in a generation. Families with qualifying assets above £2.5 million face effective 20% IHT on the excess for the first time. The 10-year interest-free instalment payment option and transferable couples allowance (£5m at 100%) provide some mitigation — but comprehensive estate planning is now essential. Do not delay seeking professional advice. Frequently Asked QuestionsWhat is the new IHT rule for farms from April 2026? From 6 April 2026, Agricultural Property Relief (APR) at 100% is capped at £2.5 million per person. Qualifying agricultural assets above this threshold receive 50% relief — an effective IHT rate of 20% on the excess. Couples can transfer the allowance, giving £5 million at 100% relief. Can IHT on a farm be paid in instalments? Yes. IHT on qualifying agricultural and business property can be paid in annual interest-free instalments over 10 years, provided the qualifying assets are still owned by the beneficiary. This applies to IHT triggered above the £2.5 million cap under the new rules. Are AIM shares still IHT-free? No — not fully. From 6 April 2026, AIM shares are restricted to 50% Business Property Relief regardless of value or how long they have been held. This means the effective IHT rate on AIM shares is 20%, compared to 0% previously for shares held for 2+ years. Did the government change the IHT farm rules? Yes. The change was announced in the Autumn Budget on 26 November 2025 and takes effect from 6 April 2026. Previously, qualifying agricultural and business property received unlimited 100% relief from IHT. The new rules cap this relief at £2.5 million per person, with 50% relief on the excess. |
IHT on Farms and Businesses April 2026: What Families Must Do Now
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