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From 6 April 2026, Agricultural Property Relief changes materially. The first £2.5m of combined APR and BPR qualifying assets still attracts 100% relief, but assets above that threshold only receive 50% relief — meaning IHT at an effective rate of 20% on the excess.
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This guide focuses on the APR changes specifically. For the parallel changes to Business Property Relief, see our guide to BPR changes from April 2026. For background on the combined picture for farming families, see Farm Inheritance Tax: APR and BPR Explained.
Agricultural Property Relief reduces the value of qualifying agricultural property for IHT purposes. It was designed to allow farms to pass between generations without a forced sale. APR applies to:
Under the rules until 5 April 2026, qualifying agricultural property attracted either 100% APR (if the owner occupied or had been entitled to vacant possession within 12 months) or 50% APR (for let land where tenancy predates 1 September 1995). There was no upper limit.
From 6 April 2026, a combined cap of £2.5m applies to the total value of assets attracting APR and BPR at the 100% rate. The cap is per individual — so a married couple each has a separate £2.5m cap. Assets above the combined threshold receive only 50% relief.
The same qualifying conditions continue to apply. What changes is that even qualifying assets only attract 100% relief up to £2.5m in total. After that, 50% relief applies (unchanged from the current position for assets that already attracted only 50% APR).
Example: Farmer with £4m agricultural estate, dying after 5 April 2026
Under old rules (pre-April 2026):
£4m agricultural estate = 100% APR = fully exempt. Taxable estate: £200,000. Below NRB. IHT = £0.
Under new rules (from April 2026):
First £2.5m agricultural: 100% APR = exempt.
Remaining £1.5m agricultural: 50% APR = £750,000 included in estate.
Total taxable estate: £750,000 + £200,000 = £950,000.
Less NRB: £325,000. Taxable: £625,000 at 40% = £250,000 IHT.
Many farming families have assets qualifying for both APR (farmland, farm buildings) and BPR (farm business, machinery, livestock in some cases). The £2.5m cap applies to the combined total of both reliefs. You cannot use £2.5m of APR plus a further £2.5m of BPR — the cap is shared.
This creates a planning challenge: which assets should be allocated to the 100% band, and which will fall into the 50% band? In most cases, professional advice will be needed to model the most tax-efficient allocation.
Example: Farmer-businessman with mixed qualifying assets
The order in which BPR and APR are applied to the cap may affect the result — take professional advice on the optimal allocation.
APR on farmhouses has always been contentious. HMRC applies strict tests to determine whether a farmhouse qualifies — it must be proportionate in size and character to the farm, and the deceased must have been a working farmer, not a retired farmer or a farming company director without genuine agricultural occupation.
With the new cap, there is more pressure to ensure every qualifying asset genuinely qualifies, as the consequences of a farmhouse being denied APR are potentially more severe when the cap limits the overall relief available.
Each spouse or civil partner has a separate £2.5m cap. A farm worth £5m could potentially pass to the next generation with the full £5m benefiting from 100% relief — £2.5m capped in each spouse's estate — provided the assets are structured and wills are drawn up to achieve this. This makes updating wills before April 2026 particularly important.
See our guide to transferring the nil-rate band between spouses for more on how to structure the first death efficiently.
Gifting qualifying agricultural property starts the 7-year clock running. If the donor survives 7 years, the property falls outside the estate entirely — irrespective of APR. This can be particularly effective where a farming family wants to pass land to the next generation now, rather than waiting until death.
Gifts of agricultural land may be eligible for CGT holdover relief, allowing the gain to be deferred into the recipient's hands. This should be considered carefully alongside the IHT planning.
Agricultural property transferred to a discretionary trust can still qualify for APR within the trust, subject to meeting the qualifying conditions. However, discretionary trusts are subject to their own IHT regime — 10-year periodic charges and exit charges. See our guide to IHT on discretionary trusts.
For farming families whose estate will exceed the £2.5m cap and who do not want to dispose of assets, a whole-of-life insurance policy written in trust can provide a lump sum to meet the IHT liability without forcing a land sale. See our guide to life insurance in trust.
APR has always been subject to anti-avoidance provisions. Key points:
BPR changes from April 2026 cap relief at £2.5m combined with APR. What it means for business owners, farms, and AIM portfolios — and what planning still works.
AIM shares lose 100% BPR from April 2026, dropping to 50% relief. What it means for AIM IHT portfolios, existing holdings, and alternatives to consider.
From April 2027, unspent pension funds fall into your taxable estate. Worked examples show the impact and the planning steps that can still reduce the bill.
The non-dom IHT regime changes from April 2025. The new 10-year resident rule means long-term UK residents face IHT on worldwide assets. What you need to know.
IHT nil-rate bands are frozen at £325,000 and £175,000 until April 2030. As house prices rise, many more estates will pay inheritance tax. Numbers, impact, and planning steps.
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