Answers · UK 2025/26
What is the GBP 1 million cap on Agricultural Property Relief for IHT from April 2026?
From April 2026, Agricultural Property Relief (APR) and Business Property Relief (BPR) are jointly capped at GBP 1 million at 100% relief, with assets above that threshold receiving only 50% relief.
Full answer
Agricultural Property Relief (APR) is an Inheritance Tax (IHT) relief that reduces or eliminates IHT on qualifying agricultural land and property. Before April 2026, APR could exempt 100% of qualifying agricultural assets from IHT with no upper limit. The October 2024 Autumn Budget introduced a significant reform that took effect from 6 April 2026. The new rules: From 6 April 2026, APR and Business Property Relief (BPR) are combined under a single GBP 1 million allowance for 100% relief. This means: - The first GBP 1 million of qualifying APR and BPR assets combined is still relieved at 100% -- meaning no IHT - Agricultural and business assets above GBP 1 million receive only 50% relief - The 50% relief above GBP 1 million effectively means those assets are taxed at 20% IHT (50% of the standard 40% rate) The GBP 1 million allowance is per person and per estate. It is not transferable between spouses in the way the Nil Rate Band is (though assets transferred between spouses on death remain IHT-exempt regardless). How APR still works: APR at 100% applies to the agricultural value of land and property occupied for agricultural purposes. It covers farmland, farm buildings, farmhouses, and cottages occupied in connection with farming. The property must generally have been owned and occupied for agricultural purposes for at least two years (owner-occupied) or seven years (tenanted). The regular IHT thresholds still apply in addition: - Nil Rate Band: GBP 325,000 per person - Residence Nil Rate Band: GBP 175,000 (where a main residence passes to direct descendants) For a farming estate worth GBP 3 million that qualifies entirely for APR, the IHT position from April 2026 would be: GBP 1 million at 100% relief (no IHT), then GBP 2 million at 50% relief (GBP 1 million chargeable), minus the GBP 325,000 NRB and potentially the RNRB, with 40% IHT on the remaining chargeable amount. Careful succession planning is now essential for larger farming estates.
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This answer is informational only and does not constitute financial, tax or legal advice. Figures are for the 2025/26 UK tax year. See our methodology and sources.