It always used to be said that there were only two certainties in life; Death and taxes. Sadly, I think you can add a third, war. The conflict in the Middle East and the UK’s forthcoming inheritance tax (IHT) reforms are shaping a more uncertain and potentially inflationary environment for the agricultural land and farm market. Together, these forces are influencing everything from input costs and market sentiment to long‑term succession planning.
The war in the Middle East is disrupting energy markets and have contributed to higher oil prices. Rising fuel and fertiliser costs place direct pressure on farm profitability, particularly for arable and mixed enterprises that rely heavily on energy‑intensive inputs.
Conversely higher geopolitical risk often pushes investors toward tangible assets such as land and gold which could increase demand for UK farmland as a perceived safe haven. We saw this post Covid and following the onset of the war in Ukraine. However, elevated borrowing costs and inflationary pressures may temper this demand.
From April 2026, the UK will introduce significant reforms to Agricultural Property Relief (APR) and Business Property Relief (BPR). Under the proposed new rules, the first £2.5 million of combined qualifying agricultural and business property will continue to receive 100% relief, but assets above this threshold will receive only 50% relief. This marks a major shift from the previous system, where most agricultural land qualified for 100% relief, often reducing its taxable value to zero. This could affect as many as 75% of farms over 150 acres in the UK.
The interaction of geopolitical instability and tax reform is likely to reshape market behaviour in several ways. Firstly, there will be further pressure on succession planning. We have already seen this over the past 12 months and it may accelerate transfers of land or restructuring of ownerships to manage future tax liabilities. Secondly, it could lead to a potential rise in supply. Some landowners may bring farms to market earlier than planned in the face of reduced reliefs.
Meanwhile investor interest in land as a stable asset may counterbalance tax‑driven sales, sustaining or even increasing prices in some regions.
Overall, I expect greater financial strain on smaller farms, particularly those with significant borrowing and high capital values but modest income.
Looking ahead, the market is entering a period of flux. While geopolitical tensions may ease over time, the IHT reforms are structural and will require long‑term planning. Professional advice will be essential for landowners navigating these changes.
Mike Taylor | Senior Partner
As featured in the Farmers Guardian Friday 3rd April 2026.