A group of experts at Knights have responded to a government announcement which will alter the inheritance tax relief threshold for farms and businesses.
The change, which sees the threshold for 100% relief raised from £1million to £2.5million, comes after months of protests from impacted communities.
Associate in the Landed Estates Team, Samuel Flower, said:
“I almost fell off my chair when I read this, and the Government announcement is an early Christmas present for a significant number of farmers & business owners.
“The change had been due to limit individuals claiming agricultural property relief (APR) and business property relief (BPR) at 100% relief to £1million - the excess being charged at an “effective” rate of 20%.
“This is in addition to the further tweak announced in the November 2025 Budget which expanded for the allowance to be transferable, as other IHT reliefs are, between spouses including where a spouse has died before 6 April 2026.
“It has now been confirmed that for deaths on and after 6 April 2026, individuals will be able to claim £2.5million of APR/BPR at 100% relief – with the excess still be an “effective” rate of 20%.
“The £2.5million will also be transferrable between spouses meaning that family farms and businesses, up to a value of £5million, can be passed to next generations without IHT being payable. In addition to the usual available nil rate bands, farming and business owning families can pass their estates on - up to a value of £5.65million.
“They have also announced that there will be a newly established Farming and Food Partnership Board to bring together senior leaders from farming, food production, retain, finance and Government. This is incredibly sensible and welcomed, providing the decisions reached are collaborative and not performative.
“Whilst it is not the unlimited relief of the past (& present), it will go a long way to strengthening the backbone of Britain’s farming heritage. Compared to the predicted devastation in April, had this change not been announced.”
Partner in the Landed Estates Team, Amy Allison added:
“It’s welcome news for many but possibly still not far enough for some family farms and businesses, it's better than it was though.
“It also comes amidst a range of ongoing issues and discussions related to the rural and farming communities of late.”
Whilst, Private Client Partner, Alexandra Milton believes it’s not just good news for farmers:
“The focus of this news will naturally fall on the farming sector, but this is also a major win for businesses - who would have also suffered under the original plans.
“This gives business owners a little more room to work out what steps they want to take going forward.
"Had these new changes not been introduced it would have been entirely plausible that businesses would have had a decision to make on whether disposing, in part or in full, before April was needed.
“It’s not as great as unlimited relief but it is a good step forward.”