On 6th April 2026, it has been announced that tax changes will be introduced for farmers across the UK. These changes will introduce significant restrictions on Agricultural Property Relief (APR) and Business Property Relief (BPR).
In this guide, we’ll explain what inheritance tax is and how it specifically will affect farmers. We’ll also explore the upcoming tax changes in more detail and explain how Jones Whyte‘s estate planning lawyers can help you prepare for this change.
Table of Contents
- What is Inheritance Tax?
- The Basics of Scottish Farmers Inheritance Tax
- How Inheritance Tax is Going to Change in 2026
- How Jones Whyte Can Help
- Key Takeaways
- Frequently Asked Questions
What Is Inheritance Tax?
Inheritance tax is a tax applied to the estate of someone who has passed away. An estate can include property, cars, pensions, etc. It only applies if the total value of the estate exceeds £325,000. If it exceeds this amount, the portion above will typically be taxed at 40%. However, the actual amount payable can vary depending on several factors, such as who inherits the assets and whether any of the estate qualifies for reliefs or exemptions.
The Basics of Farmers Inheritance Tax
Currently, farmers with estates over £1 million may not need to pay any inheritance tax – this is a benefit that’s been in place since 1984. This is due to two key categories that offer 100% relief, which are outlined below:
- Agricultural property relief: covers land and farm buildings
- Business property relief: covers livestock, machinery etc
These categories allow the farming community to pass their family farm to loved ones, without having to pay inheritance tax.
How is Inheritance Tax Going to Change in 2026?
From 6th April 2026 onwards, when a farmer passes away, APR & BPR will still be available at 100% when their estate is passed down to the next generation. However, this full relief will only apply to estates under the new £1 million allowance. Any value above this threshold will only qualify for 50% relief if its not passed down to a spouse or civil partner.
This change could potentially affect farm owners who plan to pass their property and agricultural assets on to future generations.
Example
Mr and Mrs Smith jointly own a farm in Scotland, with a total estate valued at £5 million. Of this, the land is worth £4 million, and there is a further £1 million in assets such as machinery and buildings.
If one of the owners were to pass away before 6th April 2026, no inheritance tax should be due on the estate, provided the appropriate inheritance tax relief has been applied.
However, if the owner passes away on or after this date, the estate would be subject to the new inheritance tax rules. Under the combined APR and BPR, £1 million of the estate would be exempt from inheritance tax. The remaining £4 million of the estate would then be eligible for 50% relief if passed onto future generations. This will then leave the remaining amount of £2 million to be taxed at 40%, which means they will pay £800,000 in inheritance tax.
Jones Whyte Is Here To Help
To plan for this inheritance tax change in April 2026, it is important to speak with an Estate Planning specialist who will be able to advise you on the best approach for you and your family members. By doing so, it will potentially help lessen the tax burden of agricultural and business asset changes.
To speak to an estate planning expert today, call 0141 674 4366 or visit our website for more information.
Key Takeaways
- On the 6th April 2026 tax changes will be introduced for farmers across the UK.
- Currently, farmers with estates over £1 million may not need to pay inheritance tax, due to agricultural property relief and business property relief.
- From the 6th April 2026, these reliefs will only apply to estates under the £1 million allowance. Any value above this will qualify for 50% relief.
- To plan for this inheritance tax change its important to speak with an Estate Planning expert. They will be able to advise you on the best approach for you and your family.
Please note: This article is for general information purposes only and does not constitute legal advice. It should not be relied upon as a substitute for professional legal advice tailored to your specific circumstances. If you need advice on a legal matter, get in touch with our team.
