As the April 2026 reforms to Agricultural Property Relief (APR) and Business Property Relief (BPR) edge closer, farming families are under growing pressure to revisit succession planning, ownership structures and how the next generation will take over the farm, says Alistair Millar, an Agricultural Law specialist from Tallents Solicitors.
What is changing from April 2026?
Alistair Millar is the Agricultural Law specialist at Tallents Solicitors
From 6 April 2026, the 100% inheritance tax relief for qualifying agricultural and business property will be capped at a combined allowance of £2.5 million per estate, with 50% relief available on qualifying value above that level.
This allowance is effectively transferable between spouses or civil partners, meaning a couple will be able to pass on up to £5 million of qualifying farm and business assets between them, in addition to their usual nil‑rate bands.
Above the £2.5 million allowance, affected estates will typically face an effective inheritance tax rate of up to 20% on qualifying assets, rather than the full 40% rate that applies where no relief is available, notes Alistair. In many cases, that tax can be paid in ten equal annual instalments for qualifying property, but the liability will still need to be funded from income, borrowing or asset sales.
The new squeeze for farming families: IHT and CGT together
However, the headline APR/BPR reform is only part of the story: capital gains tax (CGT) on non‑residential property has also increased, raising the stakes for any restructuring of farm ownership.
Since 30 October 2024, individuals pay CGT on non‑residential disposals at 18% (lower rate) and 24% (higher rate), and from April 2025 the Business Asset Disposal Relief rate for qualifying gains has risen to 14%.
For many farm families, lifetime transfers using CGT holdover relief have become more attractive, particularly where the aim is to secure APR/BPR at 100% on a future death under the new regime; however, gifting land today can increase CGT exposure tomorrow because you lose the “uplift” to market value on death.
That means every proposal to gift land, transfer partnership interests or sell a development “slice” must now be modelled for both inheritance tax and CGT, ideally with alternative “what if” scenarios for changing values and possible future tax change..
Why farming succession planning cannot wait
For land‑rich but cash‑poor family farms, these changes are already driving a shift in their behaviour, with more families looking at lifetime gifts, partnership restructures and selective sales to lock in reliefs and create liquidity.
Treating farming succession as a one‑off conversation around the kitchen table is no longer enough; instead, families should be treating succession as a managed project with clear objectives, timescales and professional input.
As a guide, farming families should consider:
- Up‑to‑date professional valuations of land, buildings and diversification projects, so that APR/BPR exposure can be assessed against the £2.5 million / £5 million thresholds.
- A written succession plan that identifies who will farm, who will inherit, and how non‑farming children will be treated fairly where capital is tied up in fields rather than cash.
- Joined‑up advice between agricultural solicitors, tax advisers and land agents, especially where there are potentials for development value, environmental schemes or long‑term contracts in place.
Legal housekeeping: wills, partnerships and executors
The legal requirements for farm ownership are often complex, involving wills, partnership agreements and, increasingly, company structures that must all work together if succession is to run smoothly. For example, a well‑drafted will that leaves the farm to a particular child may be undermined if a partnership agreement says that the deceased’s share is to be bought out on death, or if certain assets are in a company rather than in the estate.
Key tasks for farming families should now include:
- Reviewing and updating wills so they reflect current farm values, the new IHT relief structure, and the choice of executors capable of running or winding up a trading farm.
- Checking partnership agreements (and any shareholders’ agreements) to see what happens on death, retirement, or a sale of land, and to ensure they dovetail with the will.
- Considering carefully who should act as executor where there is a live, working business to manage – particularly given that reduced APR/BPR may leave more IHT to fund from farm income or sales.
Balancing control, protection and liquidity
Many older farmers are understandably anxious about giving away the farm before they pass away and potentially losing control, even where lifetime gifting might improve the inheritance tax position under the 2026 rules.
However, in our experience modern succession planning can help to balance those concerns by considering tools such as partnership changes, different share classes, or carefully‑drafted trusts, rather than simply transferring land outright without safeguards.
At the same time, every family needs a realistic plan for liquidity: even with a £2.5 million 100% APR/BPR allowance, some estates will face inheritance tax bills that cannot be comfortably funded from day‑to‑day trading profits.
Options to consider might include pre‑planned sales of non‑strategic land, development or amenity plots, targeted borrowing, or reorganising how and where value sits within the farm business to free up cash without undermining long‑term viability.
Taking the next step
With 6 April 2026 now firmly on the horizon, farming families who have been putting off succession planning for their farms now have a limited window to act while current reliefs are still fully available and the market remains relatively stable.
Early, specialist agricultural law advice can help you understand how the APR/BPR changes, CGT rates and your existing documents interact, and then build a tailored succession plan that protects both the farm and the family.
At Tallents Solicitors we can help you by providing coordinated advice between agricultural solicitors, tax advisers and land agents. So, if you would like to discuss succession planning, the 2026 APR/BPR reforms, or how best to structure lifetime gifts and wills for your farm, our agricultural law team can guide you through the options, provide tax advice or work alongside your accountant and land agent to put robust, tax‑efficient arrangements in place.
Please call 01636 671881 to arrange a confidential appointment.
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This article is intended for general guidance only and does not constitute legal advice. Every situation is different; for advice specific to your circumstances, please get in touch with Tallents Solicitors for an initial consultation.
