UK Raises Farm Inheritance Tax Threshold to £2.5m

The UK government announced on Tuesday a significant adjustment to its inheritance tax policy for farmers, raising the threshold for full relief on agricultural and business assets from £1 million to £2.5 million. The change, effective from April 2026, responds to widespread concerns raised by the farming community following reforms outlined in the 2024 budget.

Under the revised measures, spouses or civil partners will be able to transfer up to £5 million in qualifying agricultural or business property between them without incurring inheritance tax, in addition to existing allowances. Officials stated that the policy aims to safeguard more family-run farms while ensuring that the wealthiest estates continue to contribute to public finances. The adjustment will be incorporated into the Finance Bill in January.

The original budget proposals had capped 100 percent relief under Agricultural Property Relief and Business Property Relief at £1 million per individual, prompting protests and criticism from farmers who argued the changes threatened the viability of generational farm transfers. Government officials described the initial reforms as a means to address unlimited tax breaks on...