Question to the HM Treasury:

To ask the Chancellor of the Exchequer, what assessment she has made of the potential impact of proposed changes to Agricultural Property Relief and Business Property Relief on family farms which are passed to multiple children, including where land has to be sold to meet that liability.

The Government believes its reforms to agricultural property relief and business property relief from 6 April 2026 get the balance right between supporting farms and businesses, fixing the public finances, and funding public services. The reforms reduce the inheritance tax advantages available to owners of agricultural and business assets, but still mean those assets will be taxed at a much lower effective rate than most other assets. Despite a tough fiscal context, the Government will maintain very significant levels of relief from inheritance tax beyond what is available to others and compared to the position before 1992. Where inheritance tax is due, those liable for a charge can pay any liability on the relevant assets over 10 annual instalments, interest-free.

As announced at Budget 2025, any unused £1 million allowance for the 100% rate of agricultural property relief and business property relief will be transferable between spouses and civil partners, including if the first death was before 6 April 2026.

There are no changes to the underlying qualifying criteria or definitions for agricultural property relief and business property relief. For example, the longstanding rules mean, in order to qualify for agricultural property relief, the property must normally be agricultural property and occupied for agricultural purposes, such as cultivation to produce food for human and animal consumption. More information can be found at www.gov.uk/hmrc-internal-manuals/inheritance-tax-manual/ihtm24060.

There is a difference between the total value of a farm and the amount being passed on at death. For example, a farm can be jointly owned by multiple people or family members, meaning each individual’s claim for tax relief can relate to less than the total value of the whole farm. This is explained in more detail in the letter from the then Exchequer to the Treasury to the Northern Ireland Affairs Committee in January 2025. This is available at https://committees.parliament.uk/publications/46267/documents/232537/default/.

Information from claims is not recorded to enable regional or national breakdowns of the number of estates expected to be affected. However, the Government has set out that the reforms are expected to result in up to 375 estates across the UK claiming agricultural property relief, including those also claiming business property relief, paying more inheritance tax in 2026-27. This is a reduction from up to 520 estates forecast to pay more at Autumn Budget 2024. Almost three-quarters of estates claiming agricultural property relief, including those that also claim for business property relief, will not pay any more tax as a result of the changes in 2026-27, based on the latest available data.

A report by the independent Centre for the Analysis of Taxation (CenTax) published in August 2025, prior to the announcement at Budget 2025, concluded that half of the estates paying more would see an increase in their effective inheritance tax rate of less than 5 percentage points, and 86 per cent of these estates could pay their entire inheritance tax bill out of non-farm assets.

An updated tax information and impact note was published alongside Budget 2025 on 26 November 2025. This explains that the measure is not expected to have a material impact on food security or have a significant macroeconomic impact. It is available at www.gov.uk/government/publications/changes-to-agricultural-property-relief-and-business-property-relief/agricultural-property-relief-and-business-property-relief-changes.