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£2.5M Farm Tax Threshold Begins April 6
6 Apr
Summary
- New inheritance tax rules for UK farms start April 6, 2026.
- The tax-free threshold for inherited farms is £2.5 million.
- Controversial changes may force asset sales to pay tax.
A significant shift in inheritance tax for UK farms and family businesses takes effect on April 6, 2026. The government has established a new threshold, setting the tax-free allowance for combined agricultural and business property at £2.5 million per individual.
While this threshold was raised from an earlier proposal of £1 million after public pressure, the revised policy remains controversial within the sector. Accountants note that despite concessions, the new regime represents a substantial departure from previous regulations and will introduce considerable challenges.
Experts suggest that businesses will need to engage in more robust and earlier succession planning. This is crucial for ensuring efficient transfers and the long-term viability of farms and family enterprises. The new rules are particularly concerning for asset-rich but cash-poor farm businesses, as beneficiaries might be compelled to sell land or assets to meet inheritance tax obligations.
The government stated that by increasing the threshold, fewer farm and business owners will face higher inheritance tax bills, affecting only the largest estates.
