Agricultural Property Relief – what the changes could mean for your Will

April 15, 2025

Agricultural Property Relief – what the changes could mean for your Will

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By Nick O’Sullivan

Making a Will or reviewing an existing one on a regular basis, certainly when there is a change in circumstances, is crucial.

In light of the proposed changes to Agricultural Property Relief (APR) and Business Property Relief (BPR) made in the Autumn budget, those affected should consider having a Will or have changes made to their existing Will. This will help you navigate and reduce the potential impact of the proposed changes, and improve your overall Inheritance Tax (IHT) position.

Simple Wills

In our article Agricultural Property Relief – What Farmers Need to Know and Do, we delved into the current APR and BPR position and the reliefs available. Currently, in the vast majority of cases, no IHT is payable on a farmer’s death as the 100% APR and BPR will most likely apply. This helps a farm stay within family ownership for generations to come, and for the family to be able to continue its business.

As a result, most farming families will have in place a simple Will because if APR applied to their assets (or to the majority of them), then they could simply leave everything to whomever they wanted without worrying about the IHT implications.

How will the proposed changes impact your IHT liability?

The main changes announced in the Budget caps the relief on combined agricultural and business property to £1 million. For the value of the assets that exceed this, only 50% relief will be available.

If a married couple have simple Wills passing all of their property to the other, on the death of the second spouse, there will now be a IHT bill. This can be illustrated by the following working example:

The position pre-April 2026

If a married couple have assets that amount to £3 million, with APR available for £2 million, with BPR available for £1 million, upon the death of each spouse, the IHT bill on death will zero.

The position post April 2026

In the above example, if a married couple have mirror Wills that passes all assets to each other, on the death of the second spouse, this time there will be a IHT liability to consider. This can be illustrated by the following:

On the death of the second spouse:

The IHT will be charged at a rate of 20% (which is 50% of the usual IHT rate of 40%)

The total tax payable would therefore amount to £270,000.00

What should you therefore be thinking about when reviewing your Wills?

Depending on a couple’s circumstances (and wishes), there are simple ways to navigate these changes.

In the working example above, the married couple may consider gifting assets (that would qualify for APR/BPR) up to a value of £1 million to someone else, perhaps their children, in their Wills. This, in turn, will reduce the value of the estate that is left to the surviving spouse. After applying the relevant Nil Rate Bands, this will have a dramatic effect on the IHT bill.

Also, if, as in this example, the total of each or either of the couple’s estates would not exceed £2,000,000, then the Residence Nil Rate Bands could be applied on the death of the second to die – potentially adding £350,000 to the Nil Rate Bands available on the death of the second spouse.

A further consideration should be to think about effective lifetime planning of gifting assets, and not leaving all assets to be dealt with in Wills. By managing this effectively, the married couple could reduce their IHT liability even further.

Our upcoming Article “Lifetime transfers and Gifts” will explore this further.

Considering your Will on a regular basis is important, as changes in circumstances can change what you had originally intended, and cause you and your loved ones some difficulties.

If you would like some advice regarding the drafting of your Will, or a conversation around APR and inheritance tax, contact Nick O’Sullivan on 02920 829 100 or nosullivan@darwingray.com