What businesses need to know about Budget changes to Agricultural Property Relief

By Heather Bright, Partner and ARA specialist

October’s Budget has impacted the agricultural industry more severely than most sectors.

One of the most important announcements came in the updates to Agricultural Property Relief (APR) and Business Property Relief (BPR).

From April, APR will extend to farmland in environmental agreements with public authorities, allowing more flexibility for farmers engaged in these environmental schemes.

This change provides greater certainty, enabling farmers to make more strategic decisions about land use without fearing adverse tax consequences.

Reduced tax reliefs from 2026

Despite the extension, APR and BPR reliefs are set to be reduced from 2026.

For larger farms and estates, this change will bring an added tax burden and require thoughtful planning.

For instance, the Inheritance Tax (IHT) implications could impact estates, as relief reductions may mean higher tax bills upon death.

Farmers now face the potential of increased liabilities, which may require more complex financial arrangements to protect family assets across generations.

Defra’s new guidance for farming operations

Defra has emphasised the expectation that farms, particularly those with vast resources, should increase productivity and explore diversification independently.

This change in expectation positions farming as an industry expected to self-sustain, with public funding focused on specific outcomes like environmental sustainability.

For many farmers, the Budget signals the need for a strategic reassessment of business structure, tax relief usage, and asset management.

With increased scrutiny on valuations, phased tax payments, or borrowing may become necessary to ease immediate tax pressures.

Our team is here to guide you through these changes, offering advice on restructuring, phased payments, and valuation practices to help manage increased tax obligations effectively. Contact us today.