Tax & HMRC
⏱ 3 min read
📅 Updated May 2026
IHT and Farms April 2026: APR/BPR Cap Changes Explained
IHT relief for farms and businesses capped at £2.5m per person from April 2026.
⚡ Inheritance Tax and Farms/Businesses April 2026 — Major Change from April 2026
From 6 April 2026: Agricultural Property Relief (APR) and Business Property Relief (BPR) 100% relief is capped at £2.5 million per person. Assets above this cap receive 50% relief — an effective 20% IHT rate. Transferable between spouses (£5m combined cap for couples). |
The October 2024 Budget announced significant changes to inheritance tax reliefs for farms and family businesses, effective from 6 April 2026. These changes were subsequently revised in December 2025 — the original £1m cap was increased to £2.5m per person. APR/BPR Changes — Before and After April 2026| Scenario | Before April 2026 | From April 2026 |
|---|
| Farm/business assets up to £2.5m per person | 100% IHT relief | 100% IHT relief (no change) | | Farm/business assets £2.5m–£5m per couple | 100% IHT relief | 100% relief on £2.5m each — no change for couples | | Farm/business assets above £2.5m (single person) | 100% IHT relief | 50% relief on excess — effective 20% IHT rate | | Originally proposed cap (Budget 2024) | £1m | Revised to £2.5m — announced December 2025 |
| 📊 Approximately 85% of estates claiming APR or BPR are forecast to pay no additional inheritance tax as a result of these changes, according to GOV.UK (December 2025 announcement). The £2.5m cap is per person and is transferable to a surviving spouse or civil partner. |
Who Is Affected?- Farm owners with agricultural land worth more than £2.5m — the relief on the excess above £2.5m drops from 100% to 50%
- Family business owners with business property above £2.5m — same 50% relief on the excess
- AIM share investors — AIM shares qualifying for BPR are also subject to the new cap
- Most smaller farms and businesses — with qualifying assets under £2.5m per person, there is no change
IHT on APR/BPR Assets — Payment by InstalmentsIHT due on APR/BPR qualifying assets above the £2.5m cap can be paid in interest-free instalments over 10 years. This means farming families do not necessarily need to sell land immediately to pay the tax bill — they can spread payments over a decade. Planning Considerations- Spouses can combine allowances — a farming couple has a combined £5m cap before the 50% relief applies
- Review business valuations — accurately valuing qualifying assets determines whether you are above or below the £2.5m threshold
- Consider lifetime gifts — gifting business/farm assets more than 7 years before death (PETs) can reduce the estate
- Take professional advice immediately — these are complex rules requiring specialist agricultural and tax advisers
What changed with inheritance tax and farms in April 2026?From 6 April 2026, 100% Agricultural Property Relief (APR) and Business Property Relief (BPR) is capped at £2.5 million per person. Assets above this cap receive 50% relief (effective 20% IHT rate). The cap is transferable between spouses, giving couples a combined £5m cap. Does the APR/BPR cap affect most farmers?No — approximately 85% of estates claiming APR or BPR are forecast to pay no additional IHT, according to GOV.UK analysis. The change primarily affects larger farms and businesses where qualifying assets exceed £2.5m per person. Can IHT on farm assets be paid in instalments?Yes — IHT due on APR/BPR assets above the £2.5m cap can be paid in interest-free instalments over 10 years. This avoids the need to immediately sell agricultural land or business assets to pay the tax bill. What was the original proposed APR/BPR cap?The October 2024 Budget originally proposed a £1m cap on 100% APR/BPR relief. Following significant opposition from farming groups, the government revised this to £2.5m per person in December 2025, with the transferability between spouses confirmed. Sources: GOV.UK — APR/BPR changes December 2025 · HMRC IHT Agricultural Property Relief · NFU (National Farmers' Union) guidance · STEP — Society of Trust and Estate Practitioners |
Part of our complete guide: UK Inheritance Tax 2026 - Complete Guide → Find a regulated IFA → | Make a will online from £29.99
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Chandraketu Tripathi
Finance Editor · Kaeltripton.com
Chandraketu (CK) Tripathi, founder and lead editor of Kael Tripton. 22 years in finance and marketing across 23 markets. Writes on UK personal finance, tax, mortgages, insurance, energy, and investing. Sources: HMRC, FCA, Ofgem, BoE, ONS.
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