From 6 April 2026, the 100% rate of agricultural property relief (APR) and business property relief (BPR) is only available on the first £2.5m of qualifying business and agricultural property. The allowance was increased to £2.5m from £1m following extensive lobbying by farmers.
APR
Agricultural property relief (APR) allowances a person to pass on agricultural property either free of inheritance tax or at a reduced rate either during their lifetime or on their death. Agricultural property eligible for relief includes growing crops, stud farms for breeding and rearing horses and grazing, short rotation coppice, land not currently been farmed under the Habitat Scheme or under a crop rotation scheme, the value of milk quotas associated with the land, some agricultural shares and securities, farm buildings, farm cottages and farmhouses.
Farm equipment and machinery, derelict buildings, harvested crops, livestock and property subject to a binding contract for sale do not qualify for APR.
The relief is now only available where the property is part of a working farm in the UK. It can be owner occupied or let. Prior to the transfer, the land must have been owned and occupied for agricultural purposes for two years if occupied by the owner, a company controlled by them or by their spouse or civil partner and for seven years if occupied by someone else (such as a tenant).
The 100% rate is available where the person who owned the farm farmed it themselves, the land was used by someone else on a short-term grazing licence or it was let on a tenancy that began on or after 1 September 1995. Some properties owned before 10 March 1981 qualify for 100% relief.
BPR
Business property relief (BPR) reduces the value of an asset for inheritance tax purposes by 100% or by 50% depending on the nature of the asset. Relief is currently available at the 100% rate on a transfer of a business or shares in an unlisted company.
Relief is available at 50% for:
- shares controlling more than 50% of the voting rights in a listed company;
- land, buildings or machinery owned by the deceased and used in a business in which they were a partner or they controlled; and
- land, buildings or machinery used in a business and held in a trust that the business has the right to benefit from.
Relief is only available if the deceased owned the business or the asset for at least two years prior to their death. Shares in certain companies, such as those dealing mainly in stocks, shares, land and buildings do not qualify.
Relief is not available if the asset also qualifies for APR, if the asset has not been used in the business in the two years before it was passed on as a gift or it is not needed for use in the business in the future.
The £2.5m allowance
The £2.5m allowance is available in addition to the nil rate band (NRB) and the residence nil rate band (RNRB). However, as the RNRB is reduced by £1 for every £2 by which the deceased’s estate exceeds £2m, being lost entirely for estates worth £2.35m and above, where a person uses their £2.5m APR/BPR allowance in full, they will not also be able to benefit from the RNRB.
As with the NRB and the RNRB, where an individual’s estate does not use the allowance in full, it can be used by the estate of their surviving spouse or civil partner.
Once the allowance has been used in full, transfers of assets that would otherwise qualify for 100% APR and BPR will receive relief at 50%.
