The 2024 Autumn Budget delivered by Chancellor Rachel Reeves, introduced significant changes to inheritance tax rules – particularly affecting Agricultural Property Relief (APR) and Business Property Relief (BPR). These reforms are expected to have a major impact on farmers, landowners and business owners, sparking concern across rural communities. So, what do we know so far about the proposed changes – and how can those affected begin to plan for the future?

What is APR and BPR?

APR is a relief from inheritance tax given on the agricultural value of agricultural property when passed from one generation to the next either during lifetime or by will.  Currently if APR is available, it applies to 100% of the agricultural value of property that is passed on, meaning for the majority of cases, no inheritance tax is payable by farmers and/or landowners on the land they own.

BPR is a similar inheritance tax relief available on a business or an interest in a business and can be applied either at 100% or 50% depending on the type of assets involved and who owns them.

Both these reliefs have been essential in minimising inheritance tax liabilities, helping to prevent the breakup of otherwise viable businesses in a succession.

What are the proposed changes?

From 6^th April 2026, Agricultural Property Relief (APR) and Business Property Relief (BPR) will continue to be available at 100%. However, the total amount of relief available will be capped at £1million for combined agricultural and business property.

For assets exceeding this £1million threshold, only 50% relief will apply with the remaining 50% subject to inheritance tax at a rate of 40%.

What can be done to plan for these changes?

• Careful planning is essential, and it’s important to avoid any rushed decisions. At time of writing, the legislation is not yet in place and the announcements are simply proposals.
• Review your potential inheritance tax liability. If your assets which could benefit from APR and BPR are less than £1m, then the changes are unlikely to affect you
• Calculate your assets and liabilities, review how the assets will be distributed either by law or under your will and your current inheritance tax exposure.
• Review your wills to ensure that they are drafted to maximise the availability of the inheritance tax reliefs.
• Assess your situation and take time to review your position, get valuations and understand your current position and plan for what you would wish to happen in the future. Take advice from a professional on the options available.
• Although the announcements were shocking and have caused significant worry for a lot of landowners, farmers and business owners, with careful planning and expert advice you can ensure that assets are passed on as you wish in the most tax efficient way.
• Take advice from legal, accountancy and financial advisors who can assist and guide you through the process. Sioned Thomas, Head of Private Client and Agriculture at RDP Law – and herself from a farming background – is on hand to offer expert legal assistance and guide you through your options. For more information call 01633 413500 or email info@rdplaw.co.uk.