The Labour government in the UK has confirmed the proposed new £1m threshold for agricultural and business property relief (APR/BPR) from inheritance tax (IHT) will be increased to £2.5m.

The change represents a major win for the UK farm lobby, given that it comes on top of the announcement from the autumn budget that the new APR / BPR threshold could be transferred among spouses.

As a result, spouses or civil partners will be able to pass on up to £5m in qualifying agricultural or business assets before paying inheritance tax, on top of existing allowances.

ADVERTISEMENT

Up until the autumn budget, farmers faced the possibility of only being able to pass on £1m of assets, with this allowance not transferable to a spouse – in practice, it potentially created a very messy situation for farm families.

The new thresholds for APR and BPR are due to apply from 6 April 2026.

Commenting, Environment Secretary Emma Reynolds said the government had listened to concerns and have moved to protect “ordinary family farms”.

“It’s only right that larger estates contribute more, while we back the farms and trading businesses that are the backbone of Britain’s rural communities,” she said.

To deliver the change, the UK government will introduce an amendment to the Finance Bill currently going through Parliament, in January 2026.