It’s an inescapable truth for the rural sector that inheritance tax (IHT) changes are on their way. With these in mind, there are five principles to consider when planning for the future
1. Get to grips with APR and BPR
For most farms, the £1 million of IHT relief will likely combine agricultural property relief (APR, which applies to land and buildings) and business property relief (BPR, which applies to other assets such as farm shops to shares in the farming business.) It’s a combined cap, so do not assume there is £1 million relief for each type.
In addition, not everything relating to the farm may qualify for APR or BPR. There are numerous pitfalls, from farmhouses being insufficiently ‘character-appropriate’ to not meeting the different qualifying periods for each type of relief to lacking relevant records.
2. Don’t leave it till the deathbed
The ‘inheritance tax’ label on this new legislation suggests to some families that the impacts will kick in only after death. That’s a mistake; the changes have ramifications before that.
As a result, it’s more advisable than ever to start the process of succession planning early, getting expert advice around the options for using lifetime transfers, gifts, spousal exemptions, nil-rate bands, and the IHT taper on gifts.
If you already have planning in place, it likely needs updating to cater for the new rules.
3. Slower can be wiser
With the IHT changes just months away and people advising you to plan for succession early, you may feel pressured to find an instant IHT ‘solution’.
There are plenty of options for mitigating IHT – including transfers, trusts and life assurance – but this is complex territory. To add to that complexity, some transfers made pre-April could still be subject to the new IHT regime.
It is better for your planning to be slower and wiser than risk unintended consequences affecting anything from family relationships to eligibility for subsidies, APR or BPR.
4. Understand what you own
The nature of rural life, land and property means that many farm and estate owners don’t have full clarity (or paperwork) about the extent of what they own. Additionally, as family members diversify into new activities from farm shops to safaris, there may not be full oversight of the value or shares in these businesses.
A prerequisite for succession planning is to get precision over what you own, what you do, and all the titles and paperwork associated with that.
5. Plan holistically
Succession planning for any farm or estate requires a joined-up approach between solicitors (private client and rural – land & business), accountants and perhaps other advisers too. Rather than your farm’s future being dictated by tax, it still has to work as a viable business.
None of this is simple, and decisions must be tailored to the individual family and farm. Don’t rush into it to try to beat the deadline, but don’t delay it either. And do get specialist advice.
The changes: a recap
Currently, 100% relief from inheritance tax (IHT) is available for agricultural property and business assets, if they meet the criteria.
This changes from 6 April 2026, when 100% relief will be restricted to the first £1 million of combined agricultural and business property. Remaining assets will receive only 50% relief, making them subject to 20% IHT (at current rates).
Farming families may also be affected by the extension of IHT to unused pension funds and death benefits from April 2027 – particularly if they envisage one child inheriting the farm and another inheriting the unused pension pot.
Published 16 October 2025
