From 6 April 2026, 100% agricultural property relief (APR) and business property relief (BPR) are limited to a combined allowance of £2.5 million per person. Above that, relief is 50%. For farming and business families across North Yorkshire and West Lancashire, it’s time to check where you stand.
The key numbers. £2.5 million of qualifying assets per person at 100% relief, £5 million for a married couple or civil partners, 50% relief above that (an effective tax rate of 20%), and the option to pay any tax on qualifying assets in ten annual instalments, interest-free. The allowance is fixed until 5 April 2031.
How the allowance works
The allowance covers the combined value of qualifying agricultural and business property. It applies on death and to lifetime gifts: chargeable transfers made from 6 April 2026, and gifts made on or after 30 October 2024 if the person dies within seven years and on or after 6 April 2026.
Any value above the allowance gets 50% relief. On £1 million of qualifying assets above the allowance, that means £500,000 is taxed at 40%: a bill of £200,000.
Transfers between spouses
The government confirmed in Budget 2025 that unused allowance can pass to a surviving spouse or civil partner, including where the first death was before 6 April 2026. In those earlier cases, the full allowance is assumed to be available to transfer. In December 2025 it raised the allowance from the originally proposed £1 million to £2.5 million.
The allowance only applies to chargeable transfers. Leaving everything to your spouse is still exempt, but it’s worth checking with your solicitor whether your wills make the best use of both allowances.
AIM shares
Shares that aren’t listed on a recognised stock exchange, such as those on AIM, now qualify for 50% business relief rather than 100%. If an AIM portfolio was part of your inheritance tax plan, it’s worth reviewing.
An example
| Single owner | Married couple | |
|---|---|---|
| Qualifying farm and business assets | £3,500,000 | £3,500,000 |
| Covered at 100% | £2,500,000 | £3,500,000 |
| Above the allowance (50% relief) | £1,000,000 | £0 |
| Tax on qualifying assets, before the nil-rate band | £200,000 | £0 |
The couple’s example assumes the farm is owned jointly and the first spouse’s unused allowance transfers to the survivor. Other assets, such as the farmhouse if it doesn’t qualify, investments and, from 2027, pensions, are taxed in the normal way after the nil-rate bands.
What to review now
- Valuations. Get a realistic idea of what your qualifying assets are worth, and which ones qualify.
- Ownership and wills. Make sure both spouses’ allowances can be used.
- Lifetime gifts. Passing assets to the next generation earlier can make sense, but watch the seven-year rule and capital gains tax.
- Diversified activities. Holiday lets, farm shops and property income may not qualify in the same way. Ask your accountant.
- Funding any tax. The ten-year instalment option and life cover in trust can avoid selling land or the business.
- Pensions. From April 2027 they’ll count towards the estate too. Plan them alongside the business.
We plan the financial side and model the outcomes, working with your accountant and solicitor, who handle the tax claims and legal documents. The FCA does not regulate tax or estate planning.
Sources
- IHTM25520: AR/BR 100% relief allowance (HMRC manual)
- HMRC Trusts and Estates Newsletter, February 2026
- Inheritance Tax: thresholds, Budget 2025 (HMRC)
This guide is general information, not personal advice, and reflects our understanding of the rules on 31 October 2026. Tax rules can change and their effect depends on your circumstances.