How to prepare for the Autumn Budget’s changes to Agricultural Property Relief (APR) and Business Property Relief (BPR)
By Heather Bright, Partner and ARA specialist
The recent changes announced in the 2025 Autumn Budget have brought significant developments for farming families, particularly when it comes to Agricultural Property Relief (APR) and Business Property Relief (BPR).
As farming is often a multi-generational business, with land and property passed down through the family, these changes to this key Inheritance Tax relief (IHT)could have a considerable impact on the wealth transfer process, as we have highlighted in previous editions.
However, there is a degree of light on the horizon – albeit fairly small.
What is happening to APR and BPR?
The 2024 Autumn Budget confirmed that the IHT relief available under APR and BPR – currently 100 per cent relief on eligible assets – would be reduced so that any value exceeding the £1 million threshold will only receive 50 per cent relief.
Due to be introduced from April 2026, the change will result in a 20 per cent IHT charge for farming families who exceed the combined thresholds of the nil-rate band, residence nil-rate band and the new APR/BPR allowance.
For many farm owners, who have historically held the belief that agricultural land would pass down to future generations tax-free, this change has been very unsettling.
What changes has the Autumn Budget brought for APR and BPR?
In the Chancellor’s recent speech, it was confirmed that any unused £1 million allowance for the 100 per cent rate of APR and BPR will now be transferable between spouses and civil partners, even if the first death occurs before 6 April 2026.
This change mirrors the transferable IHT nil-rate band and will provide relief for farming families who were previously concerned about losing part of their relief entitlements due to the timing of death.
For a couple, this effectively increases the IHT threshold to up to £3 million. While this is a step forward for families worried about losing relief, there are still many farming businesses who will be affected.
How may these changes affect farming families?
For farming families, estate planning has always been a delicate balance between ensuring the business survives for future generations and mitigating tax liabilities.
The changes to APR and BPR could affect how farming businesses are passed on and could lead to unexpected tax burdens if not carefully planned for.
Farming families now face the challenge of reviewing their Wills and considering whether gifting assets during their lifetime is a more tax-efficient strategy.
For those with agricultural property and business assets held within the family, these changes mean it’s more important than ever to understand how your estate planning will be affected.
Family farms can be particularly vulnerable as assets like land, machinery, and livestock are often treated as business property under APR or BPR and could easily exceed the thresholds for tax-free transfer.
Those who are unable to avoid this tax trap will be granted the option to pay IHT by 10 equal annual instalments, interest-free, but this will still place a heavy burden on the ongoing operating costs of farming businesses.
Many farming families are also exploring that use of life insurance policies as an effective tool to provide the necessary liquidity to cover the increased IHT liabilities resulting from the upcoming changes to APR and BPR.
Act now
Now is the time for farming families to review their estate planning and speak to professionals who understand the nuances of farming businesses.
If you are relying on the traditional model of passing assets to your heirs after your death, the new rules could lead to significant tax liabilities that could diminish the value of your estate.
Seeking expert advice now can help you assess how the changes to APR and BPR may affect you and your family farm’s future.