Committee publication · Correspondence · 7 January 2026 · HC 785
Correspondence from the Department for Environment, Food and Rural Affairs relating to reforms of Agricultural Property Relief and Business Property Relief, dated 23 December.
From: Welsh Affairs Committee
Inquiry: Farming in Wales in 2025: Challenges and Opportunities
Summary
HM Treasury and Department for Environment, Food and Rural Affairs announce increased thresholds for Agricultural Property Relief (APR) and Business Property Relief (BPR) reforms effective 6 April 2026. The allowance for 100% relief rises from £1m to £2.5m per person (£5m per couple), reducing estates paying additional inheritance tax from 375 to 185 (85% unaffected) while maintaining £300m annual revenue target by 2029-30.
Key findings
- APR/BPR 100% relief threshold increases from £1m to £2.5m per person, enabling couples to pass £5m tax-free on top of nil-rate band allowances.
- Widows and widowers gain access to full £2.5m allowance from deceased spouse's first death with no time limit, retroactively benefiting those widowed before 6 April 2026.
- Number of estates paying more inheritance tax halves: 185 estates (vs. 375 previously forecast) expected to pay more in 2026-27; 85% of APR/BPR claimants now unaffected.
- Business-property-only relief claims: up to 220 estates (down from 325) forecast to pay more; 80% of claimants unaffected.
- Government confirms reforms still expected to raise approximately £300m in 2029-30 and states no further changes will be made.
Tone
ProceduralTopics
Key actors
Ruth Jones MP, Dan Tomlinson MP, Emma Reynolds MP, HM Treasury, Department for Environment, Food and Rural Affairs, Welsh Affairs Committee
Notable line
“… a couple will now be able to pass on up to £5 million of agricultural or business assets tax-free between them, on top of the existing allowances such as the nil rate band.”
Key Quotes
“The Government is announcing that the allowance for 100% rate of relief will be increased from £1 million to £2.5 million.”
“Compared to Budget 2025, today's announcement will halve the number of estates claiming agricultural property relief, including those also claiming business property relief, paying more in 2026-27.”
“The Government's commitment to farmers and the vital role they play in feeding our nation remains steadfast.”
“The Government's commitment to the policy remains and there will be no further changes to the reforms.”
Source · parliament.uk record ↗