Agricultural and business property relief capped at £1m from April 2026

The Autumn Budget 2024 announced significant changes to agricultural property relief (APR) and business property relief (BPR), effective from April 2026. Currently, qualifying agricultural and business assets attract 100% relief with no upper limit. From April 2026, the combined 100% relief is capped at £1m per individual. Qualifying assets above £1m will attract 50% relief — meaning an effective IHT rate of 20% on the excess.

The change primarily affects farming families and business owners with substantial asset values. A farm worth £3m that currently passes free of IHT will, from April 2026, attract IHT on £2m at 20% — a liability of £400,000. HMRC has indicated that an instalment option will be available to spread the liability over 10 years, but this still represents a material change for many estates.

The £1m cap applies per individual, meaning that spouses and civil partners each have their own £1m allowance. Assets that qualify for both APR and BPR are counted together against the shared cap — not separately. Solicitors advising farming and business-owning clients should be reviewing ownership structures and considering whether gifts, trusts, or lifetime transfers should be made before April 2026.

It is worth noting that the £1m cap does not interact with the nil rate band or RNRB — those allowances apply separately. An estate with £1m of qualifying agricultural assets, a £325,000 NRB, and a £175,000 RNRB could pass £1.5m free of IHT in the right circumstances.

HMRC published draft legislation in early 2025 for consultation. The final regulations are expected to confirm the detail of how mixed-use assets, partnership interests, and AIM shares are treated under the new rules.