Agricultural Property Relief

What is Agricultural Property Relief?

Agricultural Property Relief is an inheritance tax relief which can significantly reduce – and in many cases eliminate – inheritance tax on the agricultural value of qualifying assets. It can apply on death or on certain lifetime gifts.

Where the conditions are met, relief is available at either 100% or 50%, depending on the nature of the interest and how farmland is owned and occupied.

However, the rules are technical. Issues such as whether a farmhouse is “of a character appropriate”, whether land is genuinely in “agricultural use”, and how the farm is structured (for example, in a company or partnership) can all have a major impact on how much relief is available.

Agricultural Property Relief, Business Relief and changing rules

Agricultural Property Relief often works alongside Business Relief (BR), which can apply to certain trading business interests and shares. Used together, they can be powerful tools in reducing the inheritance tax exposure of a farming business or landed estate.

The regime is also changing. Under current proposals, from 6 April 2026:

• The current 100% relief for qualifying agricultural and business property is to be restricted to the first £1 million of combined APR and BR.
• Above that level, relief is reduced to 50%, with the balance of value exposed to inheritance tax at a reduced effective rate rather than the full 40%.

These reforms may be subject to further clarification or adjustment. It is therefore particularly important for farmers and landowners to review their succession plans now, rather than waiting until the changes take effect.

Thankfully in the Autumn Budget, it was confirmed that any unused £1 million can be transferred between spouses, but careful planning should be undertaken and advice sought.

Who we help

Our Agricultural Land & Estates team advise a wide range of clients, including:

• Farmers and farming families
• Owners of let agricultural land and farm cottages
• Mixed estates with residential, commercial and agricultural elements
• Trustees of landed and farming settlements
• Investors and families who have acquired farmland for diversification or long-term wealth planning
• Professional advisers (such as accountants and land agents) seeking specialist legal input on APR for shared clients

How we can help

Our cross-disciplinary team brings together specialists in Wills, Tax & Administration and Agricultural Land & Estates. We regularly advise on:

• Inheritance tax planning - Analysing your current estate and business structure, identifying where APR and BR may be available and where you may be at risk
• Structuring farms and estates - Advising on partnership agreements, corporate structures and co-ownership arrangements to support APR/BR claims while reflecting the commercial realities of how the farm is run
• Farmhouses and cottages - Assessing whether residential properties are likely to attract APR, and advising on occupation, documentation and practical steps to strengthen your position
• Tenancies and contract farming arrangements - Reviewing agricultural tenancies, grazing agreements and contract farming arrangements to ensure they are properly documented and compatible with inheritance tax reliefs.
• Succession and lifetime planning -Using Wills, trusts and lifetime gifts to move value to the next generation in a controlled way, while managing inheritance tax, capital gains tax and stamp duty land tax
• Diversification and development - Considering the impact of diversification (for example, holiday lets, commercial lets or renewables projects) and development value on APR and BR, and working alongside our Real Estate team where development or option agreements are proposed
• Estate administration and HMRC negotiations - Preparing and submitting APR/BR claims on death, liaising with HMRC and the District Valuer, and dealing with any enquiries robustly but pragmatically. 

Why instruct Thackray Williams?

Our Private Client and Agricultural Land & Estates teams brings a wealth of expertise including:

• Specialist Private Client expertise - Our Wills, Tax & Administration team is recognised in leading legal directories for its work on high-value and complex estates, trusts and tax planning
• Deep understanding of agricultural land and estates - Our Agricultural Land & Estates team is regularly instructed by well-known estates and farm owners across London and the South East, advising on sales, purchases, tenancies, options and development – all of which can affect APR
• Joined-up advice - We work closely with your existing professional advisers (accountants, land agents and financial planners) to ensure your legal and tax planning aligns with your commercial objectives and family dynamics
• Clear, practical guidance - APR is highly technical, but our approach is to explain the rules in plain English and then focus on what they mean for you, your family and your business in practice.

How our team can assist you and next steps

If any of the above may apply to you, then it is sensible to review your inheritance tax position in light of both the existing APR rules and the proposed changes.

To discuss Agricultural Property Relief and how it may apply to your farm or estate, please contact our Wills, Tax & Administration team across our London, Bromley, West Wickham and Sevenoaks offices on 020 8290 0440 or complete our online enquiry form.  We will be happy to arrange an initial discussion to explore how we can help on 020 8290 0440.