Inheritance Tax reforms – Why farming families must reassess their plans

By Heather Bright, Partner and ARA specialist

Planned changes to Inheritance Tax (IHT), set for April 2026, have raised serious questions for farming families and rural businesses.

The Government’s proposal to cap Agricultural Property Relief (APR) and Business Property Relief (BPR) at £1 million risks penalising those who own high-value, working farms but generate modest income.

The policy aims to curb tax avoidance, but the current design overlooks the realities of farming economics.

As capital-heavy enterprises with thin margins, farms could face substantial tax bills unless ownership and succession structures are carefully reviewed.

Political pressure grows in rural areas

Following Labour’s weak performance in rural local elections, organisations like the Tenant Farmers Association (TFA) are urging all parties to engage more seriously with the countryside.

While the TFA supports reform in principle, it argues the current proposals go too far and need rebalancing.

Their recommendations include:

· Doubling the APR/BPR cap to £2 million

· Making this threshold transferable between spouses or civil partners

· Offering shorter qualification periods for older or terminally ill owners

· Extending relief to landlords with tenancies of 10+ years

These are not headline-grabbing changes, but they would have real impact on farming families trying to pass on land and assets.

Restructuring brings its own risks

With the 2026 deadline looming, many families are taking action. But moving too quickly or without the right advice can trigger unintended tax charges.

· Capital Gains Tax (CGT) – Lifetime gifts may attract CGT if holdover relief isn’t correctly applied.

· Stamp Duty Land Tax (SDLT) – Transferring land with debt attached can trigger SDLT, even if it is just moving ownership within the family.

· Bank delays – Updating loan terms or consents can take months. Some farm restructures have been delayed over a year waiting for lender approval.

Assumptions like believing that gifts are automatically tax-free, or that banks will rubber-stamp changes, are proving costly.

What to do next

April 2026 is edging ever closer, but the window to act is still open. Acting early allows time to weigh options and avoid rushed decisions. Start by:

· Reviewing asset ownership and business structure

· Stress-testing your plan against IHT, CGT, and SDLT

· Coordinating legal, tax, and lending advice

· Documenting every step thoroughly

To understand what the IHT reforms could mean for your farm, get in touch with our tax team today.