With farmers continuing to mobilise in targeted protests across the UK, it’s quite clear that the government’s plan to reshape agricultural tax reliefs has unearthed a great deal of anger in the sector.
Four months on from the Budget, there are still regular protests in Whitehall and petitions gathering signatures, arguing that “changes to inheritance tax will harm UK farming deeply, with some farmers predicting their families will be forced out within two generations.”
Despite the unrest from the nation’s farmers, the government looks increasingly unlikely to reverse its decision. In response to a recent petition, which as of publication has already garnered 148,320 signatures, the reply was simply:
“There is also an urgent need to repair the public finances in as fair a way as possible. The reform of the reliefs strikes the right balance.”
So, with the much-contested inheritance tax reforms looming as early as April 2026, many farmers are left wondering: How many of the nation’s 209,000 farms will be affected?
The government has long provided Agricultural Property Relief (APR) and Business Property Relief (BPR) to protect family farms from excessive tax burdens when passing land and assets to the next generation.
However, under the new rules set to take effect from 6 April 2026, these reliefs will be capped at £1 million, leaving any remaining agricultural assets subject to taxation at 20%.
The government’s own estimates assert that this isn’t a sizable concern as only around 28% of farms will be impacted by the inheritance tax cap - which would account for approximately 58,500 farms. However, industry bodies such as the NFU have accused the government’s figures of being too conservative. Their estimates put the figure as high as 66% which would equate to almost 138,000 farms.
DEFRA figures show that the average net worth of a farm in England is £2.2 million, with many being worth more.
But that’s not the same thing as saying that all of these will be affected by the inheritance tax changes.
The Treasury states that, if you’re single, you can leave up to £1.5 million of your estate to your children or grandchildren tax-free. This includes the one million pound allowance for farm owners, plus the normal inheritance tax exemption of £500,000.
So this means that £700,000 of the average farming estate would be subject to inheritance tax if it’s left to the owner’s children or grandchildren.
But, it’s important to note that £700,000 won’t be taxed at the normal 40% rate, but at a new 20% rate for farms.
This leaves a theoretical tax bill of £140,000 for the average farm, which can be paid off in instalments over a ten-year period, without interest.
For farms that are owned jointly by a married couple however, the couple can pass on a farm worth up to £3 million to their children or grandchildren without the estate being subject to any inheritance tax at all. This is because each owner has a £1.5 million tax-free exception, and their heirs can still benefit from this if one of the owners dies before their partner.
As a result, this means that the average farm won’t be subject to any inheritance tax if it is passed on to the children or grandchildren of its co-owners.
Overall, this means that the government estimate that around a quarter of farms will be affected by the changes (around 500 farms each year), may be more accurate than the NFU’s figure, but it is perhaps more helpful to consider who will be affected by the change.
The Country Land and Business Association have calculated that this figure stands at around 70,000 farms (33% of all farms).
With little over a year until these changes take effect, now is the time to take action. You should take the time to thoroughly assess how your tax liabilities could change under the government’s impending tax reforms. To do this, you could:
Conduct an estate review to assess whether your farm's total asset value will exceed the £1.5 million or £3 million effective thresholds.
Consider succession planning early. For example, transferring assets gradually or restructuring ownership through trusts could significantly minimise your exposure to inheritance tax.
Explore business structures. Some farming businesses may benefit from restructuring to maximise available reliefs.
Seek professional advice. Understanding the shifting nuances of tax planning can help you avoid unexpected liabilities and ensure long-term stability.
Whatever the outcome of the sector’s sustained indignation, it’s clear that the objections to the upcoming IHT changes aren’t going away soon.
While the government maintains that the reforms will curb tax avoidance (such as those enjoyed by corporations who purchase land to avoid tax levies), they also cultivate uncertainty and threaten continued financial strain for genuine farming businesses.
The reality is that many farms will not be affected, but larger concerns will.
Now more than ever, proactive financial planning is essential. At Duncan & Toplis, our specialist agriculture team is here to help you navigate these complex changes, ensuring that your farm and family’s legacy remains secure.
Get in touch today to discuss your options and future-proof your farm.
