News
New Tax Pressure on Farms and Business Owners: Planning amid Uncertainty
29 May 2025
In her inaugural Autumn Budget in 2024, Chancellor Rachel Reeves announced proposals for somewhat drastic reforms to Agricultural Property Relief (APR) and Business Property Relief (BPR) under Inheritance Tax (IHT). Currently, BPR offers up to 100% relief from IHT on qualifying business assets, while APR can provide up to 100% relief on eligible agricultural land and property.
From April 2026, the government plans to cap 100% relief for the combined value of these reliefs at £1 million per estate, with any qualifying assets above this threshold receiving only 50% relief, potentially resulting in a 20% tax charge on the excess.
The proposed reforms have sparked serious concerns among farmers, landowners and business owners who need to rapidly prepare for a potentially significant increase in their future tax liabilities, but noting the Government is still consulting on this.
At the heart of these changes is a fundamental shift in how wealth tied up in land and business is treated for IHT purposes. APR and BPR have long reflected the unique nature of farming and trading businesses, and many warn that restricting these reliefs could lead to tax liabilities at the point of succession or when there is an untimely family tragedy or death. For many, the proposed reforms could have far-reaching implications for business continuity, financial stability and legacy preservation.
Identifying at-risk groups
The proposed reforms target two distinct, but often overlapping, groups: agricultural property owners and business proprietors and shareholders. Farmers, landowners and diversified rural enterprises face the possibility of the new tax on assets such as farm buildings, structures and houses, as well as land, equipment and non-agricultural business activities. In the business sector, owners and shareholders of privately held companies may see relief on unquoted shares, buildings, machinery and partnership interests reduced.
Unpacking the impact of the proposed reforms
Many of those affected have structured their estates around the current reliefs for the last 30 to 40 years but the rules may now be drastically changed with less than an 18 month notice period.
A key question now is how future tax liabilities would be met without having to release capital through the sale of property or other assets. The potential increase in IHT could disrupt long-term estate planning and place added pressure on businesses, employers and beneficiaries to fund a tax bill without access to sufficient liquid assets. The new cap could see the sale of generationally held businesses, land and infrastructure, restructuring of businesses, or forced diversification and significant restructuring costs. While such measures may be viable for some, an ageing population has limited time to respond to the new tax burden given the speed of implementation.
Mounting concern from rural and business leaders
The proposal has provoked a strong reaction from multiple sectors. While the government has suggested that most estates will remain unaffected, many quite rightly argue the impact will be far more wide-reaching than anticipated. Farmers’ unions, rural groups, businesses and professional experts have been actively lobbying the government against these changes, warning they could destabilise generational businesses, stifle investment, harm food security, force asset sales, and disrupt economies.
The proposal comes at a time of global and national economic volatility and rising costs, as well as climate uncertainties and profit challenges in the agricultural community. Some lobby groups have suggested alternative solutions, such as removing CGT rebasing on death, clawbacks and gradual relief, to ease the financial impact on farms and businesses while still raising public funds and countering tax avoidance. The government has yet to respond or publish specific legislation, and while the outcome remains to be seen, it’s clear that longstanding tax reliefs are now under scrutiny.
Taking control in uncertain times
With these reforms scheduled for April 2026, affected individuals have a window of opportunity to assess and, if necessary, restructure their estates. Reviewing asset holdings and exploring alternative planning strategies is appropriate and proactive, informed action is essential to protect complex business structures and support resilient generational transfers.
At WR Partners, we help our clients in the agricultural and business sectors prepare for change. Our specialist tax planning team can guide you through the proposed reforms, keep you informed of the latest developments, and identify effective, tailored strategies for your estate or business. If you’re concerned about how these potential reforms could impact you, we encourage you to speak to one of our friendly and experienced advisers as soon as possible
