Business Relief and Agricultural Relief: Passing On a Business or Farm
Business Relief and Agricultural Relief are the two reliefs that reduce the taxable value of business and farm assets. For decades they could remove the whole value. From 6 April 2026 that changes: 100% relief applies only to the first £2.5 million of combined qualifying property per person, with 50% relief above that. This guide explains the new cap, who qualifies, and what has not changed.
In short
From 6 April 2026, a new £2.5 million allowance applies to the combined value of property qualifying for 100% business or agricultural relief, per person. Relief at 50% applies above £2.5 million. Any unused allowance can transfer to a surviving spouse or civil partner. Shares designated as "not listed" now get 50% relief in all cases. Two people together could pass on up to £5.65 million tax-free when the allowance is combined with the nil-rate bands.
The April 2026 reform
From 6 April 2026, a new £2.5 million allowance applies to the combined value of property in an estate qualifying for 100% business property relief or 100% agricultural property relief. Relief at 50% applies to the value of any qualifying relievable property over £2.5 million. Combined with the nil-rate bands, two individuals could pass on up to £5.65 million tax-free between them. The reform was announced at Autumn Budget 2024 with a £1 million allowance; the government announced on 23 December 2025 that the allowance would be increased from £1 million to £2.5 million.
Transfer between spouses
Any unused amount of the £2.5 million allowance can be transferred to a surviving spouse or civil partner from 6 April 2026. If the first death was before 6 April 2026, the entirety of the £2.5 million allowance is assumed available for transfer. A £2.5 million allowance also applies to the combined value of relievable agricultural and business property in trusts.
"Not listed" shares
Business property relief is reduced from 100% to 50% in all circumstances for shares admitted to trading on recognised stock exchanges designated as "not listed", and for qualifying shares listed on foreign exchanges which are not a recognised stock exchange. This is a separate change from the £2.5 million cap, and it applies regardless of the size of the holding.
Who qualifies
Business Relief covers a business or an interest in a business, or shares in an unlisted company, at 100% before the cap. The deceased must have owned the qualifying asset for at least two years before death. Businesses that mainly deal in investments, securities or property do not qualify. Agricultural Relief covers farmland and farm buildings: land must have been owned and used for agricultural purposes for at least two years if occupied by the owner (or a spouse or a company they control), or at least seven years if let to someone else. Relief applies only to the agricultural value, not to development value.
Paying in instalments, interest-free
The option to pay Inheritance Tax by equal annual instalments over 10 years interest-free is extended to all property eligible for agricultural or business property relief. The paying guide has the full instalment rules.
How many estates are affected
HMRC estimates the reforms will result in up to 1,100 estates across the UK paying more Inheritance Tax in 2026/27. Around 85% of estates claiming agricultural relief and more than 80% of estates claiming business relief (excluding "not listed" shares) are forecast to pay no more Inheritance Tax as a result.
Related guides
Sources: GOV.UK, Agricultural property relief and business property relief changes.