Agricultural Property Relief (APR) and Business Property Relief (BPR) used to mean most family farms passed down with little or no inheritance tax. From 6 April 2026, after the Finance Act 2026 became law in March 2026, the reliefs are capped. For many farms nothing changes in practice, but for some there will now be a bill, and that bill has to be paid from somewhere.
This guide explains the cashflow side only. It isn’t tax or legal advice. Talk to your solicitor and a tax adviser about your own situation, and check the current rules on GOV.UK.
The rules in plain English
- 100% relief on the first £2.5 million of combined qualifying agricultural and business property, per person.
- 50% relief above that, which works out at an effective inheritance tax rate of 20% on the excess.
- Unused allowance can pass to a spouse or civil partner, so a couple may be able to pass on up to £5 million of qualifying property with full relief.
- Tax on qualifying property can be paid in ten equal annual instalments, interest-free.
- Lifetime gifts count. Gifts made since 30 October 2024 can fall into the new rules if the person giving dies within seven years.
What it looks like in a forecast
Take a simple, illustrative example. One owner holds £4 million of qualifying farm property and no allowance is available from a spouse. Ignoring other assets and allowances:
- £1.5 million sits above the £2.5 million allowance.
- At an effective 20%, that’s a bill of about £300,000.
- Paid in ten annual instalments, that’s £30,000 a year for ten years.
Can the farm carry an extra £30,000 a year, every year, for ten years? That’s a cashflow question as much as a tax one.
For a farm making a modest profit after drawings, £30,000 a year can be the difference between paying down the overdraft and growing it. It may mean selling land or machinery, slowing investment or taking on borrowing, unless it’s planned for.
Questions worth asking now
- What is the farm worth today? An up-to-date valuation is the starting point for any estimate.
- Who owns what? How land, buildings and the business are held between family members makes a big difference.
- Is the spouse allowance being used well? Wills may need reviewing.
- Could insurance cover part of a bill? If so, the premiums are a cash cost to forecast too.
- Could the farm pay an instalment from income? A forecast with the instalment built in shows whether the business can carry it, or what would have to change.
Where a forecast helps
Succession planning usually starts with solicitors and tax advisers, and it should. But the answer has to work in the bank account too. I build forecasts that put a possible instalment, insurance premiums or a planned land sale into the farm’s cashflow, so the family can see the effect before decisions are made. If that would help, ask about the Partner service, which includes succession planning support.
An accountant of ten years who has built more cashflow forecasts than hot dinners. I help farms and agricultural businesses across Yorkshire see what’s coming and plan for it. More about me.