2026 Changes to Agricultural & Business Property Relief: 5 Steps to Protect your Assets

BLOG23rd Jan 2026

By Paul Halliday

Paul Halliday, author of blog on how to maximise tax relief & 2026 Changes to Agricultural & Business Property Relief: 5 Steps to Protect your Assets
Paul Halliday

Contact Paul Halliday

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Big changes to Business Relief (BR) and Agricultural Relief (AR) are coming in April 2026 following the announcements at the Autumn Budget back in 2024.

The current 100% relief was to be capped at £1 million per person, with any value above this threshold obtaining only 50% relief, meaning individuals could be hit with a much bigger inheritance tax (IHT) bill than previously anticipated.

However, on 23 December 2025 the Government softened the IHT changes for business owners/farmers as they announced that they will increase the limit for full relief from £1 million to £2.5 million, with value above that obtaining 50% relief.

THE 2026 AGRICULTURAL & BUSINESS PROPERTY RELIEF CHANGES IN PRACTICE

To give an example, let’s say Mr X owns qualifying business property and/or farming assets valued at £5 million and dies. If he dies before 6 April 2026, no IHT would be payable. If he dies on or after 6 April 2026, an IHT liability of up to £500,000 could arise.

Pre 6 April 2026 (£) Post 5 April 2026 (£)
Value of qualifying assets 5,000,000 5,000,000
Relief @ 100% (5,000,000) (2,500,000)
Relief @ 50% n/a (1,250,000)
Taxable value NIL 1,250,000
Tax @ 40% NIL 500,000

For many families, raising funds to meet this liability may be challenging. While the tax can be paid in interest-free instalments over 10 years, this could still put pressure on cash flow.

5 STEPS TO PREPARE FOR AGRICULTURAL & BUSINESS PROPERTY RELIEF CHANGES IN 2026

Despite the challenges highlighted above, there remains a window of opportunity between now and 5 April 2026 to look at ways to potentially mitigate the impact of the changes.

The first step will be to review your current IHT exposure and assess how this will change from 6 April 2026.  We can then work with you to identify strategic tax planning opportunities, some of which are highlighted below.

1. REVIEW CURRENT BUSINESS STRUCTURE AND/OR FARMING ASSETS

Review your current business structure and/or farming assets to ensure your assets qualify for BR and/or AR in the first instance and any restructuring which may be needed.

2. REVISIT YOUR WILL

While leaving your estate to a spouse still defers IHT until their death, and the £2.5 million BR/AR allowance will now be transferable to a surviving spouse, this may not be the most effective option for your circumstances. A Will review is not only advised, but essential.

3. MAXIMISE INDIVIDUAL BR AND/OR AR ALLOWANCES

In a similar vein, spouses should consider organising their affairs to ensure they are structured as effectively as possible. If lifetime transfers between spouses are required, it is important to note that the recipient must own the business property and/or farming assets for two years to qualify.

4. CONSIDER SUCCESSION PLANNING NOW

Is there something that can/should be considered now in terms of passing on value to the next generation, to take advantage of the current rules?

5. USE TRUSTS WHERE APPROPRIATE

If it’s too early to pass value to the next generation directly, consider creating trusts for the benefit of the next generation. Control can be retained through trusteeships. In order to maximise the use of trusts, any planning should be undertaken before the changes to the rules on 6 April 2026.

How AAB Can Help

At AAB, our Private Client team are already working closely with clients affected by the forthcoming changes to Agricultural and Business Relief. We combine detailed technical expertise with a practical understanding of HMRC’s approach, helping clients navigate the reforms and take steps now to minimise potential inheritance tax exposure.

If you would like to understand how the changes may impact your estate, or explore what planning opportunities are available ahead of 2026, we would welcome the opportunity to speak with you. Please get in touch with your usual AAB contact or reach out to our inheritance tax planning team below to arrange a review.

How AAB can help

Private Clients & High Net Worth Individuals

Our team support a diverse array of individuals such as employed professionals, business owners, families and international sports stars. As AAB clients, they all benefit from absolute confidentiality and share a unified goal of optimising and safeguarding their personal wealth. Our services extend far beyond mere tax return completion. In addition to standard personal tax compliance, our dedicated team of personal tax specialists delivers dependable and practical tax advice, ensuring full compliance and optimal positioning.

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