FEATURED Articles9 Mar 2026
Are You Prepared For Making Tax Digital (MTD) For Income Tax?
If your earned income from self assessment or property exceeds £50,000 gross you will be affected by this change.
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An early Christmas gift for Business Property Relief and Agricultural Property Relief
There was an early Christmas present in 2025 awaiting disappointed farmers
Back in November 2025, as part of my Autumn Budget experience, I got to watch several tractors driving up and down the Strand. Not their natural habitat for sure! This is the second time I have seen a protest of this type – the first was in France whilst studying for my degree. At that time tractors descended on Clermont-Ferrand’s city centre, slowing all the major roads in the area, whilst protesting for higher prices.
Back to 2025 – this protest was against the upcoming restriction to Agricultural Property Relief. This is a relief available against inheritance tax for the value of a working agricultural farm. Currently 100% of this value is relieved (the rate was raised in 1992), so there has been no inheritance tax on the value of the family farm.
However, the Chancellor had announced changes in the Autumn 2024 Budget to limit this 100% relief to only the first £1m of value. Thereafter the relief was cut to 50% (so value in excess of £1m would be taxed at 20%).
This £1m limit would also be shared across any business property (e.g. unlisted shares – say, a family business) bringing increasing value within the IHT “net”.
The protest had no immediate effects, as there was no change announced during the Autumn 2025 Budget.
However, there was an early Christmas present in 2025 awaiting the disappointed farmers – firstly, the allowance would be transferable between spouses/civil partners, in the same way as other reliefs. But there was more to come, the £1m limit was increased to £2.5m!
This protects farms and/or businesses of up to £5m against IHT (across a married couple) and does not require juggling the value between them to make sure no allowance is lost on the first death.
At the time of writing, the Finance (No 2) Bill is going through the House of Commons.
Key information +-
THE AUTHOR
Sarah Messruther
Senior Manager, Mixed Tax
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