In the 2024 Budget, the government limited Agricultural Property Relief (APR) and Business Property Relief (BPR) on inheritance tax (IHT) to agricultural properties with a value of £1m or less. Above this threshold the relief will be set at 50%.

This week’s Budget did not make any changes to the policy which is likely to improve morale within the farming fraternity. The only alteration announced in the Budget is that the 100% relief to APR and BPR will be transferable to a spouse from 6th April 2026. This means that any unused allowance for the 100% rate of relief will be transferable between spouses and civil partners, for the purposes of inheritance tax. If the first death was before 6th April 2026, it will be assumed the entirety of the allowance will be available for transfer to the surviving spouse or civil partner.

Duncan Barrie, Head of Farm Sales within Galbraith, said: “This Budget has sadly totally overlooked the rural sector once again. There had been a hope (albeit fairly slim) within the farming and landowning community that the Chancellor may have substantially revise or reverse the changes to APR and BPR announced last year, which are due to come into effect in April. But the Chancellor has instead managed to reinforce a climate of uncertainty and confusion, for farmers, and as has opted to dismiss the claims proposed threshold, will catch many more family farms than anticipated.

The implications of the proposed changes for farming businesses are substantial, and majority of farming business operate on a long-term investment cycle, and profitability can vary considerably due to current volatility within the sector, pressures on consumer spending, fluctuations in farmgate prices and a rapidly changing legislative environment.

The vast majority of landowners who were previously unaffected by this tax, now have to take measures to mitigate their risk. Whilst the effects of these changes on the farmland market remains to be seen, it is however highly possible that there will be an increase in supply as land is brought to the market to fund IHT liabilities where alternative sources of funding are unavailable. The proposed changes are misguided, and do little to support a sector which contributes massively to the economy, the environment and our food security

Galbraith handles the sales and purchases of whole farms, land, rural property and forestry as well as providing agriculture advice and rural business management services, across Scotland and the north of England.