Estate Planning: Agricultural Property Relief

What is Agricultural Property Relief (APR)?

Agricultural Property Relief is a relief from Inheritance Tax (IHT) on the transfer of agricultural property, either during lifetime (e.g., via gifts or trusts) or on death. The relief is intended to keep farming businesses intact by reducing the IHT burden on key agricultural assets.

A major change has been announced that from the 6^th April 2026 the full 100% relief from inheritance tax will be restricted to the first £1 million of combined agricultural and business property.

To qualify for Agricultural Property Relief, the property must be:-

1. Farmland
2. Farm buildings
3. Farmhouses (if they meet specific conditions)
4. Woodland used for agricultural purposes
5. In use for agricultural purposes at the relevant time
6. Part of a working agricultural business

APR is only applied to the agricultural value of the property and this is the value it holds when used for solely for farming.

Future development prospects or non-farming use will not qualify for APR but may qualify for Business Property Relief (BPR).

Agricultural Property Relief and Farmhouses

APR on farmhouses is a more complex area. For a farmhouse to qualify:-

1. It must be occupied as part of the agricultural business
2. There must be a connection between the house and agricultural land
3. It must be of a character appropriate to the farm

HMRC have been known to challenge farmhouse claims especially when the farmhouse is more valuable than the working farm.

If you are uncertain about your eligibility and want to see how Agricultural Property Relief fits into your estate planning then please do not hesitate to contact the Probate team on 01302 341414 or 0114 272 1884. Alternatively, you can fill out our online enquiry form.