It’s been hard to miss the reaction to the latest Budget when it comes to inheritance tax and farming. What was once a fairly settled area has quickly become a hot topic, sparking protests and strong opinions across the sector.
Following the initial announcement, the government softened its position in December 2025. However, significant changes are still on the way—and they will take effect from 6th April 2026.
What Was the Position Before April 2026?
Until now, agricultural land has benefited from 100% relief from inheritance tax.
However, this relief has always come with an important limitation: it only applies to the agricultural value of the land. If land could achieve a higher price for something like residential development, that additional value would not qualify for the relief.
There were also conditions around ownership and use. The relief could be claimed if:
The land had been owned and actively farmed for at least two years before death, or
It had been owned for seven years if it was let out to a tenant farmer
What’s Changing?
After stepping back from earlier, stricter proposals, the government has introduced a cap on the amount of relief available.
From April 2026:
The 100% relief will be limited to £2.5 million per individual
For married couples or civil partners, this could effectively rise to £5 million, as unused relief can be transferred
Anything above these thresholds will no longer receive full relief. Instead:
Relief will drop to 50%
This means inheritance tax on the excess value will effectively be charged at 20%, rather than the standard 40%
What Does This Mean for You?
For those with higher-value agricultural land, these changes could have a significant impact on estate planning.
If you’re unsure how the new rules might affect you—or want to explore your options ahead of April 2026—our Wills and Probate Team is here to help.
