Farm and business inheritance tax relief: the new £2.5 million allowance

Business Property Relief and Agricultural Property Relief changed on 6 April 2026.

How the new rules work

• The first £2.5 million of qualifying business and agricultural property still gets 100% relief from inheritance tax
• Above £2.5 million, relief drops to 50%, so the effective inheritance tax rate on the excess is 20% rather than 40%
• The allowance is per person and can be transferred between spouses and civil partners, so a couple can pass on up to £5 million of qualifying assets before any tax is due

The government raised the allowance from the £1 million first announced to £2.5 million.

AIM shares

Shares in companies on markets that don't count as listed for HMRC purposes, such as AIM, now only get 50% relief. They don't use up the £2.5 million allowance.

Who should review their plans

• Owners of family companies and trading businesses
• Farmers and landowners
• Anyone holding AIM shares for inheritance tax reasons

Good planning — such as reviewing wills, ownership and succession — can make a big difference. Speak to us before making any changes.