The changes to Agricultural Property Relief (APR) and Business Property Relief (BPR) have now come into force and, after a lengthy period of announcements, amendments and uncertainty, farming families finally have a clearer picture of the new Inheritance Tax regime.

But the changes aren’t simply about how much relief is available.

They also make it increasingly important for farming families to have clear ownership records, properly documented transactions and robust, up-to-date valuations.

Where did the APR and BPR rules end up?

From 6 April 2026, an individual can receive 100% APR and/or BPR on the first £2.5 million of qualifying agricultural and business property combined.

Qualifying property above that allowance receives 50% relief, effectively reducing the potential rate of Inheritance Tax on that element from 40% to 20%.

Importantly, any unused £2.5 million allowance can be transferred between spouses and civil partners. This means a couple could potentially have up to £5 million of qualifying agricultural and business property benefiting from 100% relief, in addition to other available IHT allowances.

Inheritance Tax due on qualifying APR and BPR property can also be paid in 10 annual interest-free instalments.

Understanding exactly what you own, what it is worth and whether it qualifies for relief has become increasingly important.

Getting the paperwork right

Many farming families have spent the past couple of years reviewing ownership, partnerships, gifts and succession arrangements.

Whatever changes have been made, the important thing now is to make sure the paperwork reflects the reality.

Transfers and disposals should be properly documented. Gifts need to be correctly recorded. Partnership agreements and accounts should accurately reflect ownership and profit shares.

There can also be complications where an asset has been gifted but the person making the gift continues to use it or benefit from it.

Farming businesses are rarely straightforward, and arrangements that have evolved informally over several generations can make establishing exactly who owns what surprisingly complicated.

With potentially significant tax consequences attached to those answers, now is a sensible time to make sure everything is in order.

And then there is valuation…

This is an area which we think is going to become increasingly important.

Under the previous regime, where qualifying agricultural and business assets could often receive 100% relief without an overall financial cap, there could understandably be less focus on precisely where a farm’s total value sat.

That has changed.

Once the value of qualifying assets determines whether an estate sits below or above the new £2.5 million allowance, accurate market valuations really matter.

And it isn’t simply a case of putting a value on the farmland.

A farming estate might include agricultural land and buildings, the farmhouse and cottages, livestock, machinery, grain and other stocks, growing crops and assets with development or hope value.

There may then be diversified or non-agricultural assets sitting alongside them.

A robust valuation therefore needs to consider the whole picture.

Diversification adds another layer

Modern farms are increasingly diverse businesses.

Converted barns, commercial storage, holiday accommodation, dog walking fields, renewable energy projects and other enterprises can all sit alongside the traditional farming operation.

From an Inheritance Tax perspective, however, the fact that something sits within the farm boundary doesn’t automatically mean it will qualify for agricultural relief.

APR broadly relates to the agricultural value of qualifying agricultural property. Where property has moved away from agricultural use, the position can become more complicated.

BPR may potentially apply instead, but this depends on the nature of the business and whether the relevant qualifying conditions are satisfied.

This makes understanding how each asset is actually being used just as important as knowing who owns it and what it is worth.

Don’t wait until probate

Perhaps the biggest takeaway from the changes is that the time to understand your farm isn’t after somebody has died.

For farming families, there are three relatively simple questions worth asking now:

Who owns what?

What is it worth?

How is it being used?

The answers should then be reflected correctly in partnership agreements, accounts, Land Registry titles, tenancy arrangements and other business records.

An up-to-date valuation can also provide a useful starting point for discussions with your accountant and solicitor about succession and future tax planning.

The final APR and BPR regime is more favourable than the £1 million allowance originally proposed, but that doesn’t remove the need for planning. If anything, the introduction of a financial threshold makes understanding the value and structure of the farming business more important than before.

At Hollingstone, we undertake RICS Red Book valuations of farms, land, property, machinery and livestock, including valuations required as part of tax and succession planning.

If you’re reviewing your farm assets following the APR and BPR changes, please get in touch.