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Agricultural Property Relief: Autumn Budget 2024 Changes

The rumours prior to the unveiling of the Autumn Budget were that Agricultural Property Relief was to be scrapped. While this was not the case there have been considerable changes.

If you own agricultural property, it is imperative that you consider the recent announcements. 

What is Agricultural Property Relief?

Agricultural Property Relief is an Inheritance Tax relief which can be claimed on the agricultural value of agricultural property situated in the UK.

Agricultural property includes, but is not limited to:

  • Agricultural land or pasture.
  • Woodlands occupied with (but ancillary to) the agricultural land or pasture.
  • Buildings used in connection with the intensive rearing of livestock or fish, provided the buildings are occupied with (but ancillary to) the agricultural land or pasture.
  • Farmhouses and the land occupied with them, that are of a character appropriate to the agricultural land or pasture.

How does the Agricultural Property Relief  currently work?

If the conditions for Agricultural Property Relief are met, the farm can benefit from an Inheritance Tax Relief of 100%. Therefore, it will not be subject to any Inheritance Tax.

What changes were announced by the Chancellor in the Autumn 2024 Budget in connection with the relief?

From 6 April 2026, Agricultural Property Relief will no longer be a 100% relief where the agricultural value of the farm exceeds £1 million.

If the agricultural value exceeds £1 million, 50% of the value which exceeds £1 million will not be taxed, and the remaining 50% will be subject to Inheritance Tax charged at 20%.

What are the financial implications of the changes to Agricultural Property Relief?

The effect of the changes is that farms throughout the UK will be subject to Inheritance Tax where they exceed £1 million in agricultural value and no other reliefs are available.

For example, a £4 million farm, where no other reliefs are available, will be taxed as follows:

  • The first £1 million is exempt.
  • The agricultural value exceeding the £1 million threshold is £3 million.
  • 50% of £3 million is exempt, totalling £ 1.5 million.
  • The remaining £1.5 million is subject to Inheritance Tax charged at a lower rate of 20% (the usual rate is 40%).
  • £1.5 million * 20% = £300,000. 
  • £300,000 tax is now payable; prior to April 2026, no tax would be payable.

What should you do?

You must consider estate planning and your Wills. With the help of accountants and our Wills service, we can structure your estate to reduce as much as possible your estate’s Inheritance Tax liability.

Please get in touch with the Private Client department by phoning 02920 345 511 or emailing estateplanning@berrysmith.com.