Farmers face tighter inheritance tax (IHT) rules from April 2026 that could increase the risk of land sales among rural families, according to advisers at accountancy and advisory practice Azets.
Under measures due to be implemented in the Finance Act 2026, Agricultural Property Relief (APR) and Business Property Relief (BPR) will be capped for farmer deaths occurring after 5 April 2026.
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The changes restrict 100% relief only to the first £2.5m ($3.35m) of qualifying assets per individual, with 50% relief applying to the value above that level.
Azets warns that many rural families will be affected by the reforms and, in some cases, they may be forced to sell land held for generations.
AzetsTax Advisory, Farming and IHT director Rebecca Colmey said: “The problems began immediately following the 2024 budget when the restrictions were announced without any detail.
“The restrictions were effective immediately for gifts made post budget day, if the farmer were then to die post 6 April 2026 but within seven years of their gift, and so prompted the need for advice and action.
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By GlobalData“But there was no certainty as to the legal form of the changes until the draft legislation was finally made available on 21 July 2025.
“Our team were surprised that the draft legislation ignored the recommendations within the House of Commons’ Report of 16 May 2025 – The Vision of Farming. It recommended a more generous level of Agricultural Property Relief to be made available to genuine farmers rather than a blanket lower level of relief to all including investors in agricultural land.”
Colmey added that changes were then made in the 2025 Budget to allow the transfer of unused allowances between spouses. This was followed by the announcement in December that the £1m limit was to be increased to £2.5m per individual.
The company also highlighted frustration among farmers over how the changes were unveiled and then revised over time.
Azets is an international business advisory group with a presence in eight countries. The company has branches across the UK.
