An independent report for Government has found new inheritance tax (IHT) rules set for implementation in April 2026 are causing ‘significant ongoing concern’ for farmers.
Released on Thursday 18th December, the farm profitability report by former National Farmers’ Union president, Baroness Minette Batters, has found the farming sector is ‘bewildered and frightened’ by upcoming changes to Agricultural Property Relief and the impact these will have on succession planning for farmers.
Samuel Flower, an Associate in the Landed Estates team at Knights, shares his take on the report’s findings and provides a summary of what’s changing from 6 April 2026 and how farm owners can best prepare.
Sam Flower, Associate at Knights, said:
Following publication of the Government’s independent review into Farming Profitability for 2025, it is perhaps surprising that there is only a brief mention of inheritance tax (IHT) and the upcoming changes in April 2026.
This has been a consistent theme of conversation, discussion and instruction between us at Knights and our clients since mid-2024 on how to succession and tax plan for the future sustainability, viability and continuation of British farms.
What is changing from 6 April 2026?
Full IHT relief on Agricultural Property and Business Property Relief (APR/BPR) will be capped at £1 million per individual or trust (trust rules differ if established pre or post 29 October 2024), rather than the previous unlimited amount before April 2026. Any excess over the £1 million will only receive 50% relief with tax charged on the balance at 40%, giving an “effective” rate of 20% over £1 million.
The impact on farm succession could be significant as farms over £1 million will face IHT exposure, risking forced assets sales, debt or dilution of future farming generations. Farming clients are already finding their livelihoods difficult with high levels of stress, uncertainty and have protested to ensure that their voices are heard.
One crumb of comfort from the 2025 Budget is that the £1 million is now transferrable between spouses and available if the first spouse has died before April 2026. This doesn’t mean that careful and efficient planning should be ignored on first death.
Planning before 6 April 2026 allows time for restructuring of estates/trusts, lifetime gifting and to strengthen relief claims.
From 6 April 2026 and when the changes take effect, the options available could become more limited and where possible we advise avoiding reactive planning.
Balancing this significant task alongside farming work/life is no mean feat and to prepare for these changes, we recommend relevant farm owners do the following:
- Complete fact finding on farming estate details and consult with professionals in quieter months.
- Engage with specialist advisors in law, accountancy and land agency. If possible joint meetings between these professions can focus attentions and ensure a joined-up approach.
- Where appropriate, combine meetings with specialists alongside farm visits, it assists visualisation and can provide context on farm layout for the business structure.
Even with a busy farming schedule, early preparation and purposeful planning can protect farming legacies, avoid last minute or “too late” stress and assist growth for the area in a challenging environment.