For many in the rural sector, last week’s Autumn Budget felt like the second chapter in the story which began 12-months ago. In simple terms, very little was announced which would significantly impact on those in the rural sector. The Chancellor confirmed that the previously announced reforms to Agricultural Property Relief (APR) and Business Property Relief (BPR) will go ahead from April 2026. The main positive headline change is that the £1 million cap on 100% APR/BPR is now transferrable between spouses and civil partners.
A sector that made its voice heard
One notable feature of Budget Day was the farming demonstrations taking place in London. Rather than being a sign of despair, they were a positive and powerful reminder that agriculture remains a vital national industry with a collective voice. The demonstrations highlighted three encouraging themes: unity, with farmers from all sectors standing together to emphasise the importance of British food production; visibility, as many outside the rural sector saw farmers confidently and constructively discussing long-term food security and land management; and constructive engagement, demonstrated by a clear call not for handouts but for workable policy, improved tax clarity, fairer supply chains and meaningful support for sustainable food production.
What the IHT changes mean on farm
Looking at the reforms in practical terms:
- The principle has changed.
The days of assuming a whole farm will automatically pass down free of IHT are over. Many farms or diversified units face a meaningful tax exposure above the £1 million (or £2 million per couple) full relief limit. - Transferability helps but planning is essential.
The ability to transfer unused allowances between spouses is genuinely valuable. It assists for more holistic succession planning. - Diversification becomes a balancing act.
Enterprises such as holiday lets, commercial barns and non-farming income streams may fall outside APR/BPR. Farmers will need to weigh income generation against potential tax erosion.
What to do next
In light of the Budget, farming families should now take a proactive approach to succession planning. This includes reviewing wills, partnership agreements and ownership structures to ensure they remain fit for purpose under the revised APR/BPR framework. It is also sensible to map out all assets and to stress-test the Estate against a post-2026 death scenario to understand the potential tax exposure. Diversified enterprises should be reviewed carefully to confirm whether they still qualify for relief with paperwork, business records and professional valuations kept fully up to date.
This Budget had not been the news many hoped for. The challenges around inheritance tax are real. However, with the right advice and proactive forward planning, steps can be taken to mitigate the IHT liability.