Inheritance tax changes to impact over 42,200 English and Scottish farms

Over three-quarters of farms in England and Scotland of 50ha (124ac) or more in size will be affected by the changes to UK inheritance tax rules, independent analysis from the Agriculture and Horticulture Development Board (AHDB) shows.

The new rules are to come into effect on 1 April 2026.

It has calculated that 42,204 out of 54,938 farms (76.8%) across the two nations will be impacted by the new tax rules, which will see the full 100% relief from inheritance tax restricted to the first £1m of combined agricultural and business property, from April 2026.

More than half affected are involved in tillage or general cropping production as their main enterprise, with the rest predominantly livestock producers or mixed farming operations.

AHDB analyst Tom Spencer said that tillage farms are the most likely to be affected, due to their scale and asset size.

“For livestock farms, it is those businesses with single-person ownership that are most at risk,” he said.

The AHDB has previously said that due to the low rate of return on net current assets in farming, the most cost-effective way a cereals producer could pay their expected tax burden would be to sell parcels of land.

AHDB’s economics and analysis director, David Eudall added that the debate on whether the change to the inheritance tax is the right decision, is not for AHDB to comment on.

“Our priority is to help explain how this will impact many levy payers and support them on navigating a path through these challenges. The first stage has been to identify the farms at risk, so they can review their own circumstances and implement appropriate actions,” he said.

"It is critical for any affected farming enterprise to seek out expert tax and business planning advice. Succession planning was already important in agricultural farming businesses, now it is essential."

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