In short: if you own a working farm and meet the conditions, agricultural property relief can eliminate or reduce IHT on the agricultural portion of your estate.

Who qualifies and what assets count?

For agricultural property relief to be claimed:

• The assets must form part of a working farming business or agricultural undertaking in the UK.

• The owner (or their spouse/civil partner) must have occupied the land or farmland in the required period.

• Farmhouses or cottages must be “of a character appropriate” to the farming activity — a mansion detached from the farming operation might not qualify in full.

• If the land is under an environmental management or habitat scheme, changes implemented from 6 April 2025 now allow some land managed under such a scheme to qualify.

It’s essential to check the nature of the tenancy, occupation and actual agricultural use — non-agricultural diversification (e.g., kennels or holiday lets) may jeopardise the relief.

How much relief is available — and how does agricultural property relief interact with other reliefs?

Currently (pre-6 April 2026 rules), the relief may be either 100 % or 50 % depending on circumstances.

• If the owner or their spouse occupies the land and the tenancy began after 1 September 1995 (or they farmed it themselves), the 100 % rate applies.

• In other cases, the 50 % rate applies.

Additionally:

• The relief can apply in addition to the nil-rate band (£325,000) and the residence nil-rate band (£175,000) where relevant.

• It can interact with business property relief (BPR) if the land or farm has diversified business elements. However, each relief has its own qualifying criteria.

What’s changing for 2025/26 and beyond in relation to agricultural property relief

It’s important to understand that the key reforms to agricultural property relief take effect from 6 April 2026 (for most estates) though some additional scope changes apply from 6 April 2025.

Changes from 6 April 2025

From this date, the definition of qualifying agricultural land for relief is extended to include land managed under an approved environmental agreement (with or on behalf of government or approved bodies).

Major reforms from 6 April 2026

• A new combined allowance for 100 % relief under agricultural property relief and business property relief of £1 million (combined) per individual will apply. Assets above that threshold will attract relief only at 50 %.

• An effective IHT rate of 20 % (i.e., 50 % relief on the excess value) will apply on the value of qualifying assets above the £1 million allowance.

• The £1 million allowance is not transferable between spouses or civil partners.

• For trusts: there will also be a £1 million allowance per trust for relief on relevant property charges (10-year anniversary, exit charges).

• Shares in companies not listed on recognised stock exchanges (e.g., AIM companies) will attract only 50 % relief in all cases under the new legislation.

Implications for 2025/26 and forward

While the changes don’t take full effect until April 2026, it is crucial for landowners and farmers to act now. Lifetime gifting, trust review, will review, and restructuring may need to be considered before the changes bite.

What landowners should consider doing now

Given the upcoming changes to agricultural property relief, landowners and farming families should consider the following actions:

• Review your will and estate plan to ensure you maximise relief before 6 April 2026 and that you are aware of the £1 million cap.

• Consider making lifetime gifts of qualifying agricultural property, so that the relief is locked in under old rules — subject to surviving the required seven-year period for IHT taper relief on gifts.

• Review the structure of ownership (individual, partnership, company) and the arrangement of trusts, especially if assets may exceed the £1 million cap.

• Consider the nature of tenancy agreements and the occupation of farmhouses/cottages — make sure the agricultural use is genuine and meets the “character appropriate” test.

• For farmland entering environmental schemes: ensure that the scheme qualifies under the April 2025 extension for agricultural property relief.

• Ensure you understand how business property relief may interact if your farm has diversified business activities.

• Consider funding for future IHT liabilities — with the effective rate potentially rising, cash‐flow and capital planning may be required.

How Trueman Brown can help you

At Trueman Brown Chartered Accountants, we specialise in advising on tax reliefs for farmland and agricultural businesses — including mastering the complexities of agricultural property relief.

If you would like to explore how these rules apply to your estate, trust or succession plan, please do contact us:

• Phone: 01708 397262

• Email: mark@truemanbrown.co.uk

Our team can help:

• Assess whether your assets qualify for agricultural property relief

• Review and restructure your estate or will to maximise relief under the current rules

• Advise on lifetime gifting strategies ahead of the April 2026 reforms

• Help with trust review, tenancy arrangements and farm business structuring

• Provide a clear roadmap for funding any potential IHT liability

With the upcoming changes to agricultural property relief, planning ahead is more important than ever — we’d be pleased to walk through your options with you.

Frequently Asked Questions (FAQ)

Q 1: What is the minimum period of ownership or occupation needed for agricultural property relief?
A: Typically, the owner (or their spouse/civil partner) must have occupied the land immediately before the transfer for at least two years if they farm it themselves (or via a controlled company). If the land is occupied by someone else, the requirement is often seven years.

Q 2: If my farm is worth more than £1 million, will I lose agricultural property relief?
A: From 6 April 2026 the first £1 million of combined qualifying agricultural and business property may still qualify for 100 % relief; the value above that will qualify only for 50 % relief — which means an effective 20 % IHT charge on the excess.

Q 3: Can my spouse or civil partner get a second £1 million allowance?
A: No. The allowances under the new rules for agricultural property relief and business property relief are not transferable between spouses or civil partners.

Q 4: Does agricultural property relief apply to a farmhouse?
A: Yes — but the farmhouse must be “of a character appropriate” to the farming activity. A very large or luxury farmhouse detached from the business may not qualify in full.

Q 5: What happens if the land is under an environmental scheme or habitat management?
A: From 6 April 2025 the scope of agricultural property relief was extended to include land managed under an approved environmental or habitat scheme (if the agreement is with government/approved body) — provided the other qualifying conditions are met.

Q 6: Should I consider gifting farmland now rather than waiting until death?
A: Potentially yes. Gifting may allow you to secure relief under the current rules — but you must survive seven years for full IHT relief on the gift and subject to other conditions. Because of the upcoming changes to agricultural property relief, a gift strategy may make sense but must be considered carefully with professional advice.

Q 7: Can business property relief and agricultural property relief be claimed together?
A: Yes — but only where the different parts of the business qualify under each relief separately (for example agricultural land under APR, and diversified business assets under BPR). The interaction can be complex and must satisfy the base conditions for each relief.

If you’d like to talk through how agricultural property relief may apply in your personal circumstances — or how the April 2026 changes may impact you — please get in touch with Trueman Brown (01708 397262 / mark@truemanbrown.co.uk).

We look forward to working with you.