Everyone will be aware how controversial the government’s announcement was, in the 2024 budget, that Agricultural Property Relief (“APR”) and Business Property Relief (“BPR”) from inheritance tax, previously unlimited at 100%, would be limited to £1 million as from April 2026. It was announced that, above that limit, only 50% relief would be available. We haven’t heard too much from the business community, but the farming community has been up in arms.

The government has finally reacted, in response to pressure in the media (and from the tractors in Parliament Square!). In this year’s autumn budget, it was clarified that the £1 million allowance, like the £325,000 “nil rate band” tax-free allowance and the £175,000 allowance on your main residence would be “transferable”. This would mean that if a husband and wife had a farm in joint ownership or, more commonly, in the name of one of them, and one died leaving their entire estate to the other (tax-free because inheritance between spouses is exempt) the second to die, on leaving the farm to their children, could use both allowances. That means that in addition to the £1 million in other allowances (£325,00 x2 + £175,000 x2) the first £2 million, not just £1 million, would be eligible for 100% relief, setting the threshold at £3 million, effectively.

The most recent announcement goes further. The £1 million allowance is to be increased to £2,500,000 and will, presumably, still be transferable, setting the effective threshold at £6 million. Only the most valuable farms will now be affected, although it would be no surprise if this limit is then frozen for year after year, as with other allowances, to claw some of the benefit back over the years.

Still, the tractors are off the roads for the time being.