What the Autumn Budget means for farmers in Yorkshire and across the UK


Following the Autumn budget in October, the government has announced that it will restrict the availability of inheritance tax, agricultural property relief (APR) and business property relief (BPR) from 6 April 2026.
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The rules currently
Inheritance Tax (IHT) relief of up to 100% is currently available on qualifying business and agricultural assets. Agricultural Property Relief (APR) is available on the agricultural value of agricultural land and property and Business Property Relief (BPR) is available on trading business assets.
Generally, farmers have been able to use APR and BPR to pass agricultural property to the next generation free from IHT, maintaining the traditional family farm.
Owning and letting land on Farm Business Tenancies (FBTs) which can also attract 100% APR, has made land an attractive and safe investment.
The new allowances
A new allowance of £1 million will apply per taxpayer for the combined value of property qualifying for 100% BPR and 100% APR, from 6 April 2026.
The current rate of 100% will continue to be available on the value covered by this allowance, but any excess value will be limited to relief at 50% (where the qualifying conditions are met).
- This allowance will not be transferable between spouses on first death
- It will be allocated against property qualifying for 100% relief first so that it is not allocated to assets that only qualify for 50% relief. Where multiple assets qualify for 100% relief, the allowance will be allocated proportionately based on value
How much tax will an estate pay?
An estate with a trading farming business of £2 million could attract 100% relief on the first £1 million and 50% relief on the second £1 million. This means a potential inheritance tax liability of £200,000. This is before the application of any other exemptions and the available nil-rate bands and assuming there are no failed lifetime gifts that come back into the IHT calculations.
An estate with a £5 million farming business would need to find £800,000.
Impact on trust assets qualifying for APR and/or BPR
There will be a combined £1 million allowance for trusts on the value of qualifying property to which 100% relief applies, on each ten-year anniversary charge and exit charge. However, the government will launch a technical consultation in 2025 about exactly how the changes will impact trusts. It could even be that using trusts and the allowance available to them will form part of future succession plans! We will need to wait and see what the detailed rules concerning existing and future trusts will look like.
How will the changes affect those concerned?
The changes are likely to have a significant impact on the IHT payable for estates whose value of qualifying assets is larger than £1million. Interest will also apply to the deferred liability on IHT assets if they are paid in instalments.
If you want to discuss how the Autumn Budget will affect you, please get in touch with Katie Wright on 01482 398376, email [email protected] or visit Agriculture Solicitors | Legal Support For Farms & Families