What is the new farm inheritance tax threshold?

The agricultural assets threshold is now £2.5m per individual, or £5m for couples. Amounts above that receive 50% relief. This reduces the immediate tax burden for many family farms and narrows exposure to larger estates, improving planning and reducing pressure to sell land quickly.

How does this change affect farmland values?

By cutting forced-sale risk, the change should support farmland values. Buyers and sellers can plan without deadline pressure, and lenders view collateral more favourably. While prices depend on local supply and productivity, the policy likely stabilises the market and keeps transactions orderly rather than distress-led.

What should inheritance tax farmers do now?

Order updated valuations, review eligibility for agricultural property relief and business property relief, and refresh wills and partnership agreements. Map gifting, insurance, and timing to use the couple’s effective £5m allowance. Keep records of land use and diversification to support claims during succession and probate.

Does this change reduce all tax on farm transfers?

No. The threshold is higher, and 50% relief applies above it, but liabilities can remain depending on asset values and eligibility. Families should model scenarios with advisers, optimise reliefs, and plan liquidity so any residual tax can be met without damaging core operations or land holdings.

Global Market Insights

UK Farm Inheritance Tax U-Turn, December 24: Threshold Raised to £2.5m

ByHuzaifa Zahoor December 25, 2025December 25, 2025

The UK’s U-turn on inheritance tax farmers lifts the agricultural assets threshold from £1m to £2.5m, or £5m for couples. Above that, 50% relief applies. Around 1,100 estates are now in scope, and expected revenue drops by £130m. Announced on 24 December, the shift reduces forced-sale risks and should support farmland values. We explain what changed, why it matters for UK farm succession, and how lenders and suppliers may respond in early 2026.