The government has announced it is raising the relief threshold for inheritance tax for UK farmers.
The news will be of great interest to agricultural communities currently inheritance tax planning in Cheshire, Oswestry and surrounding areas.
The change in policy follows extensive lobbying from the farming lobby. The Treasury and the Department for Food and Rural Affairs (DEFRA) confirmed that the Agricultural and Business Relief (APR) threshold will be raised from £1 million to £ 2.5 million, effective from April 2026. Spouses will be able to bequeath estates of £5 million or under without being subject to inheritance tax in addition to existing allowances.
The government said that it had listened to the concerns of rural communities and was keen to do more to protect agricultural businesses. As a result of the changes, it anticipates that the number of family estates liable for higher rates of inheritance tax will drop from 2,000 to 1,100.
Analysts have said that the latest move is likely to assuage farming opinion, for now. Agriculture has experienced a turbulent period in recent months, with a significant degree of disruption, stress and delays to investment and succession decisions. The industry has called for not just higher inheritance tax threshold but also a greater climate of stability and certainty.
The Environment Secretary, Emma Reynolds, said that farmers were fundamental to the UK’s food security, adding that she was determined to cooperate with them to deliver a profitable future. She emphasised though that the largest farms will need to contribute the most.
