Inheritance Tax Changes: A Challenge for Farmers and Family Businesses

For generations, family farms and businesses have been passed down with the expectation that they will continue to support future generations. But from April 2026, changes to Business Property Relief (BPR) and Agricultural Property Relief (APR) could make succession far more difficult.

Whether it’s a farm that has been in the family for a century or a business built from the ground up, these changes mean that passing down your life’s work will require careful legal planning - or risk significant tax bills that could force families to sell off land or assets just to cover the cost.  So now you not only have to worry about whether your children want to take over the family farm or business … you also need to assess if they can afford to.

Currently, both BPR and APR allow certain assets to be passed down with 100% inheritance tax (IHT) relief. But from April 2026, this full relief will only apply to a combined total of £1 million across both types of assets.

• Anything above £1 million will only qualify for 50% relief, leaving a significant portion potentially subject to 40% IHT.
• This affects farmers, shop owners, manufacturers, family-run firms - anyone hoping to keep their business or land in the family.

For farmers, land isn’t just an asset - it’s a livelihood, often passed down through multiple generations. The fear of being forced to sell parts of a farm to cover inheritance tax is very real.

For family businesses, these changes mean that succession planning will be more complicated and potentially more costly, especially for those whose business assets exceed £1 million.

• Review Your Will and Succession Plan – If your Will is older than your smartphone, it could be time for a review.  Ensuring your Will is structured to maximise available reliefs is more important than ever.
• Use Both Spouses’ £1 Million Allowance – If you are married or in a civil partnership, structuring your estate to utilise each spouse’s £1 million relief can double the amount eligible for full IHT relief, helping protect more of your assets.
• Make the Most of Other Allowances – Planning to fully utilise the £1 million nil-rate band for inheritance tax could help reduce the impact of these changes.

Although these changes don’t take effect until 2026, legal and succession planning takes time. Leaving it too late could result in difficult choices - whether that’s selling land, breaking up a business, or leaving loved ones with an unexpected tax bill.

Speaking to a member of the Thomas Flavell & Sons Private Client Team now can help ensure that your farm, business, or both can be passed down with as little disruption as possible.

After all, these aren’t just assets - they’re family legacies, built to last.