UK imposes inheritance tax on large farms and family businesses
Change
The United Kingdom implemented a new inheritance tax on inherited farms and family businesses, providing 100% relief on the first £2.5m of combined agricultural and business property per person and only 50% relief on amounts above that threshold, effective 6 April 2026.
Why it matters
Heirs and estate trustees can no longer assume full tax relief for multi-asset farm estates and must now plan for a taxable excess when combined agricultural and business property pushes an estate above the personal allowance. Succession and liquidity arrangements that previously avoided inheritance tax will need revising to meet this new payment requirement.
Implications
- • Estate executors and trustees must secure liquidity or arrange asset sales to pay inheritance tax on any combined agricultural and business property value that exceeds the per-person £2.5m allowance — failure to do so will force settlements from estate assets.
- • Private client tax advisers and accountants must update clients' succession plans and cash-flow models to reflect the reduced relief above the allowance — clients who do not receive updated planning will face unexpected tax liabilities at transfer.
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