Understanding Agricultural Property Relief (APR): Rules, Eligibility and Budget reforms

December 5, 2025

Agricultural Property Relief is an important inheritance tax relief to be aware of in England and Wales. It allows certain types of agricultural property to be passed on during a person’s lifetime, or on their death either free of inheritance tax or at a reduced rate of inheritance tax. This can be extremely beneficial in protecting family farms and agricultural businesses.

What agricultural property qualifies for the relief?

Qualifying agricultural property is land or pasture that is utilised to grow crops or to rear animals.  It also includes:

  • stud farms for breeding and rearing horses and grazing
  • trees that are planted and harvested at least every 10 years (short-rotation coppice)
  • land not currently being farmed under the Habitat Scheme
  • land not currently being farmed under a crop rotation scheme
  • the value of milk quota associated with the land
  • some agricultural shares and securities
  • farm buildings, farm cottages and farmhouses (subject to specific conditions)

However, it is important to note that some agricultural property does not qualify for Agricultural Relief.  Excluded agricultural property includes:

  • farm equipment and machinery
  • derelict buildings
  • harvested crops
  • livestock
  • property subject to a binding contract for sale
Agricultural Property Relief Eligibility Criteria

To qualify for APR, the property must meet the following criteria:

  1. Location – The property must be part of a working farm in the UK (it can still be eligible if it is owner occupied or let).  If claimed before 6 April 2024, the relief also applies to charges on death and other transfers in the Channel Islands, Isle of Man and European Economic Area.
  2. Occupation – the property must have been occupied for agricultural purposes immediately prior to the transfer for the ownership periods set out below
  3. Ownership
    • 2 years if occupied by the owner, a company controlled by them, or their spouse or civil partner
    • 7 years if occupied by somebody else
What are the rates of agricultural property relief?

100% APR is available if:

  • The landowner farmed the land themselves
  • The land was used by another party under a short-term grazing license
  • The land was let out under a tenancy that commenced on or after 1 September 1995

If the property was owned before 10 March 1981, this can qualify for 100% relief if:

  • It would have qualified under Schedule 8 of the Finance Act 1975 had the transfer occurred prior to that date
  • The owner had no right to vacant possession from that date up to the current transfer date

Otherwise, relief is typically due at 50% in cases such as older tenancies or if the conditions are not fully met.

Recent and future changes to APR due to budget reforms

From 6 April 2025 – Agricultural property relief now includes land managed under environmental agreements with public bodies and approved organisations.  This encourages more farmers to engage in environmental schemes without risking a loss of Agricultural Property Relief.

From 6 April 2026 – there will be more significant reforms to Agricultural Property Relief such as: 

  • £1 Million Cap: The first £1 million of combined APR and Business Property Relief assets will continue to receive 100% relief. Any value above this will receive 50% relief.
  • Non-transferable Allowance: The £1 million allowance is not transferable between spouses or civil partners.  Assets automatically receiving 50% relief will not use up the allowance.
  • Trusts: Trusts created before 30 October 2024 may benefit from a separate £1 million allowance for 100% relief. For trusts created after this date, the allowance will be split across multiple trusts by the same settlor.
Agricultural shares and securities

Certain company shares and securities may qualify for APR where:

  • Their value gave the deceased control of the company as at the date of death
  • Their value is attributable to agricultural property owned by the company
Gifts of agricultural property

Agricultural property gifted during a person’s lifetime may continue to qualify for APR if:

  • The recipient retains ownership until their own death or the donor’s death; and
  • It is agricultural property that has been continuously used for agricultural purposes since the date of the gift.

If the recipient of the gift dies before the donor, APR conditions must be satisfied both at the time of the gift and at the time of the recipient’s death.

Replacement agricultural property

APR may still apply where qualifying agricultural property has been replaced by other property that also qualifies for the relief but certain conditions must be met.  The conditions also apply where the original property was gifted.

The conditions are:

  • The full proceeds from the sale are used to acquire the replacement property;
  • The transactions are conducted at arm’s length meaning the buyers and sellers act independently and have no relationship to each other; and
  • The sale and purchase occur within a three-year window.

When combined, the original and replacement properties must meet the conditions outlined under “Gifts of agricultural property”.

Where replacement property is held at the time of death, APR may be available if:

  • The property was occupied for agricultural purposes by the owner for at least two years within the five years preceding death; or
  • The property was owned and occupied (by the owner or another party) for agricultural purposes for at least seven years within the ten years prior to death.

APR is limited to what would have been available prior to the replacement.  If the property was sold below market value, APR is restricted to the proportion treated as a gift.

How can we help?

In summary, if you own agricultural property, then Agricultural Property Relief could be a powerful tool for you.  This relief, alongside many others that may be relevant to your situation, should be carefully considered when estate planning. 

Contact our expert Private Wealth and Inheritance team today to discuss how we can help by advising you of the relevant reliefs for you to ensure you maximise what you leave behind.

Graeme Black
Partner, Private Wealth & Inheritance
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This reflects the law and market position at the date of publication and is written as a general guide. It does not contain definitive legal advice, which should be sought in relation to a specific matter.

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