The announcement in the Autumn Budget about restrictions to inheritance tax (IHT) agricultural and business property relief from April 2026 has upset farming businesses in particular, resulting in a demonstration in London on 19th November.
From 6 April 2026, it is proposed that 100% relief will only apply to the first £1 million of combined agricultural and business property, with the relief reducing to 50% on the value that exceeds £1 million. This means the relief will be focused on small family farms and businesses. Prime agricultural land prices currently exceed £10,000 an acre and with the cost of a new combine harvester approaching £1 million, many farming businesses will significantly exceed the proposed £1 million threshold. At £10,000 an acre, that means the £1 million threshold would be exceeded by a 100 acre farm so paying the IHT may mean selling off some of that land and threatening the viability of the business.
It should be noted that the IHT in respect of agricultural property and business assets can be paid to HMRC by 10 interest-free installments but those may be difficult to pay without selling off assets.
