As has been well documented in the press, the UK Government Autumn Budget of October 2024 introduced major reforms to Agricultural Property Relief (APR) and Business Property Relief (BPR) – two key tools for inheritance tax planning in farming families. We summarised this change and it’s likely effect on farming businesses in a previous article – Impact of the UK Budget on Agricultural Property Relief and Business Property Relief: What Farmers Need to Know – Eden Legal.

Following strong opposition from the rural community, at the last Autumn Budget on 26 November 2025 the Chancellor announced a concession, making the APR and BPR allowance transferable between spouses. A further surprise announcement just before Christmas improved things further by substantially increasing the tax threshold.

Together, these two amendments are a significant step forward in alleviating the concerns of Scottish farming families, but thoughtful and well-informed succession planning remains extremely important.

What changes were announced in October 2024?

To recap, from 6 April 2026, the combined value of APR and BPR qualifying assets for which 100% relief can be claimed was originally set to be capped at £1 million for each individual. Any qualifying assets owned above that threshold would attract 50% relief, meaning an effective 20% inheritance tax (IHT) rate on the excess.

What further changes to APR and BPR were announced in the November 2025 Budget and December update?

Transferable Allowance Between Spouses / Civil Partners – The Government confirmed that any unused portion of the allowance can be transferred to a surviving spouse or civil partner – even if the first death occurred, or occurs, before 6 April 2026. This mirrors the existing treatment of the IHT nil rate band and residence nil rate band.

Threshold Increased to £2.5 million – In a further announcement in late December 2025, the Government increased the full relief threshold from £1 million to £2.5 million per individual. As before, assets above this threshold will be taxable for IHT but will attract 50% relief.

What is the combined impact of these changes on Scottish Family Farms?

Tax relief on agricultural and business assets is limited. Previously, all qualifying assets could pass on the death of the owner entirely free of inheritance tax. Now, only assets worth up to £2.5 million per person will benefit from full IHT relief.

Couples can now combine allowances. This means that up to £5 million of combined relief on qualifying assets is now available across both estates for married couples, or those in civil partnerships.

Increasing the taxable allowance to £2.5 million and allowing it to be transferred between spouses and civil partners will certainly improve the position for many farming families and ease the pressure felt around this issue. It remains the case however that there are many farming businesses where the land and business assets will exceed these thresholds, often by some way, so careful planning for the future remains essential.

What steps should you take now to protect yourself and your family?

1. Review Your Estate Values

Arrange up to date valuations of your APR and BPR eligible assets to help you fully understand your current inheritance tax exposure.

2. Check Your Current Business Structure

Review whether your farm business currently qualifies for 100% relief and consider restructuring if needed.

3. Seek Professional Advice

The tax changes are complex and will impact every family and business in a different way, depending on your own particular circumstances. Your solicitor and accountant will be able to work with you to help protect your position. Grant funding may be available from the Farm Advisory Service to help pay for your professional costs Succession Planning – Increased Grant Funding Available for Specialist Advice – Eden Legal (although at the time of writing applications for this funding are currently paused, due to the high levels of demand).

4. Update Wills and other Legal Documents

As part of your succession and tax planning, you should ensure that your wills and other legal documents (such as partnership agreements, title deeds, trust deeds and shareholder agreements) are up to date, work together, and are structured to maximise the available allowances.

5. Consider Lifetime Transfers and Trusts

You may wish to make lifetime gifts or establish trusts before the new IHT rules take full effect in April 2026.

6. Plan for Future Tax Charges

If the value of your estate exceeds the tax-free allowance and IHT is likely to be payable in future, you should think about how any such tax liability could be funded, for example, with suitable life insurance, or asset sales.

For detailed advice and guidance to help protect your family farming business, please contact our specialist team of rural business and estate planning lawyers.