From 6 April 2026, agricultural property relief (APR) and business property relief (BPR) stop giving unlimited 100% relief from inheritance tax. Instead, 100% relief applies to the first £2.5 million of combined qualifying agricultural and business assets per person, with 50% relief above that level (gov.uk, HM Treasury, 23 December 2025).
This briefing sets out the verified figures behind the reform: how many estates HM Revenue and Customs (HMRC) expects to be affected, how the value of past claims was distributed, the scale of English farming, and the revenue at stake. Every statistic below carries its figure, date and geography, with an inline source. Figures are current as at July 2026 and are subject to change. This is general information and data reporting, not advice.
Executive summary
- From 6 April 2026, 100% APR and BPR applies to the first £2.5 million of combined qualifying agricultural and business assets per person, and 50% above that; the allowance is transferable, giving up to £5 million per couple (gov.uk, HM Treasury, 23 December 2025, UK-wide).
- Around 85% of estates claiming agricultural property relief in 2026-27, including those also claiming business property relief, are forecast to pay no more inheritance tax as a result of the reform (gov.uk, 23 December 2025, UK).
- HMRC estimates up to 1,100 estates across the UK will pay more inheritance tax in 2026-27 because of the change: up to 185 claiming agricultural relief and up to 915 claiming only business relief (gov.uk, updated 3 March 2026, UK).
- In 2021-22, 93% of estates claiming agricultural relief claimed for agricultural property valued below £2.5 million, with a median claim of £486,000 (gov.uk, HMRC data, updated 3 March 2026, UK).
- In 2021-22, 40% of the Exchequer cost of agricultural relief went to the top 7% of claims, that is 117 estates receiving £219 million in relief (gov.uk, HMRC data, updated 3 March 2026, UK).
- In 2021-22, 53% of the Exchequer cost of business relief went to the top 4% of claims, that is 158 estates receiving £558 million in relief (gov.uk, HMRC data, updated 3 March 2026, UK).
- England had 102,300 commercial farm holdings in 2024, at an average of 87 hectares each (Defra, agricultural facts, 2024, England).
- The original £1 million-based reform was scored to raise £520 million a year by 2029-30; the £2.5 million version raises less, and its revised costing is being taken into the next Office for Budget Responsibility forecast (gov.uk, 21 July 2025; gov.uk, 23 December 2025, UK).
Key findings
- From 6 April 2026, 100% APR and BPR is capped at the first £2.5 million of combined qualifying assets per person, with 50% relief on value above that (gov.uk, HM Treasury, 23 December 2025, UK).
- The £2.5 million allowance is transferable between spouses and civil partners, including where the first death occurred before 6 April 2026, giving up to £5 million per couple (gov.uk, 23 December 2025, UK).
- Around 85% of estates claiming agricultural relief in 2026-27 are forecast to pay no more inheritance tax after the reform (gov.uk, 23 December 2025, UK).
- HMRC estimates up to 185 estates claiming agricultural relief will pay more inheritance tax in 2026-27 (gov.uk, HMRC, updated 3 March 2026, UK).
- HMRC estimates up to 915 estates claiming only business relief will pay more inheritance tax in 2026-27, of a total up to 1,100 estates affected (gov.uk, HMRC, updated 3 March 2026, UK).
- On the original £1 million-basis scoring, HMRC estimated around 2,000 UK estates would pay more inheritance tax in 2026-27, about 0.3% of all UK estates and about 4.5% of estates that pay inheritance tax (gov.uk, HMRC, 21 July 2025, UK). The revised £2.5 million basis lowered this count to up to 1,100 estates (gov.uk, HMRC, updated 3 March 2026, UK).
- In 2021-22, the median agricultural relief claim was £486,000 and 93% of claims were for agricultural property below £2.5 million (gov.uk, HMRC, updated 3 March 2026, UK).
- In 2021-22, the median business relief claim was £200,000 and 96% of claims were for business property below £2.5 million (gov.uk, HMRC, updated 3 March 2026, UK).
- In 2021-22, 117 estates (the top 7% of agricultural claims) received £219 million in relief, 40% of the total cost of agricultural relief (gov.uk, HMRC, updated 3 March 2026, UK).
- In 2021-22, 158 estates (the top 4% of business claims) received £558 million in relief, 53% of the total cost of business relief (gov.uk, HMRC, updated 3 March 2026, UK).
- Agricultural property relief cost the Exchequer about £0.6 billion and business property relief about £1.1 billion in 2021-22, roughly £1.7 billion combined (Institute for Fiscal Studies, analysis of HMRC data, 2021-22, UK).
- England had 102,300 commercial farm holdings in 2024, farming 8.9 million hectares at an average of 87 hectares per holding (Defra, agricultural facts, 2024, England).
- The inheritance tax nil-rate band remains £325,000 and the residence nil-rate band up to £175,000, both frozen until 5 April 2031 after a one-year extension at Budget 2025 (gov.uk, as at July 2026, UK).
- The inheritance tax standard rate is 40%, reduced to 36% where at least 10% of the net estate passes to charity (gov.uk, as at July 2026, UK).
What changes on 6 April 2026
Before 6 April 2026, qualifying agricultural and business assets could attract 100% relief from inheritance tax with no upper limit. From 6 April 2026 that unlimited 100% relief is replaced by a capped allowance. The mechanics matter for any estate holding a farm, a trading business, or unlisted company shares.
| Feature | From 6 April 2026 | Source |
|---|---|---|
| 100% relief allowance | First £2.5m of combined qualifying agricultural and business assets, per person | gov.uk, 23 Dec 2025 |
| Relief above the allowance | 50% relief on value above £2.5m | gov.uk, 23 Dec 2025 |
| Transferable between spouses/civil partners | Yes, including first deaths before 6 April 2026; up to £5m per couple | gov.uk, 23 Dec 2025 |
| Certain unlisted shares (e.g. AIM) | Relief reduced from 100% to 50% | gov.uk, 21 Jul 2025 |
| Superseded figure (do not use) | Earlier £1m allowance, stated non-transferable | gov.uk, 30 Oct 2024 / 21 Jul 2025 |
Source: HM Treasury and HMRC, gov.uk, 23 December 2025 and 21 July 2025. UK-wide. This allowance sits alongside, not instead of, the standard nil-rate bands.
What the numbers mean: the reform narrows 100% relief to a per-person ceiling but keeps partial (50%) relief for value above it, so the effective inheritance tax rate on qualifying assets above £2.5 million is 20%, not the headline 40%. The transferability confirmed on 23 December 2025 is material, because it doubles the combined 100% allowance available to a surviving spouse or civil partner to £5 million.
Who the reform affects
The headline count of affected estates fell sharply between the original and revised policy. HMRC's estimates below assume no behavioural change and are described as maximums.
| Group (2026-27) | Estates paying more IHT | Basis |
|---|---|---|
| Claiming agricultural relief | Up to 185 | £2.5m allowance |
| Claiming only business relief | Up to 915 | £2.5m allowance |
| Total affected estates | Up to 1,100 | £2.5m allowance |
| Agricultural-relief estates paying no more IHT | Around 85% | £2.5m allowance |
Source: gov.uk, HMRC, updated 3 March 2026; gov.uk, 23 December 2025. UK-wide. Estimates assume no behavioural response.
How past relief was distributed
The reform's design reflects HMRC data showing that most claims are modest, while a small number of large claims absorb much of the cost. Both facts are true at once, and both come from the same HMRC dataset for 2021-22.
| Measure (2021-22) | Agricultural relief | Business relief |
|---|---|---|
| Median claim value | £486,000 | £200,000 |
| Share of claims below £2.5m | 93% | 96% |
| Top claims by cost | Top 7% (117 estates) | Top 4% (158 estates) |
| Relief to those top claims | £219m (40% of cost) | £558m (53% of cost) |
| Approx. total relief cost | ~£0.6bn | ~£1.1bn |
Sources: median, share, and top-claim figures from gov.uk, HMRC, updated 3 March 2026; total cost from Institute for Fiscal Studies, analysis of HMRC data, 2021-22. UK-wide.
What the numbers mean: the £2.5 million per-person allowance is set close to the 93rd percentile of agricultural claims and the 96th percentile of business claims, which is why HMRC expects most claimant estates to be unaffected. The cost of the reliefs, by contrast, is concentrated in the largest claims, which is the pattern the reform targets.
Farm scale for context
To read the £2.5 million threshold against real farms, Defra's official statistics set out the number and size of English holdings.
| Metric | Value | Year / geography | Source |
|---|---|---|---|
| Commercial farm holdings | 102,300 | 2024, England | Defra |
| Total farmed area | 8.9m hectares | 2024, England | Defra |
| Average holding size | 87 hectares | 2024, England | Defra |
Source: Defra, agricultural facts, 2024 (England).
Revenue at stake
The revenue figures below are the original scoring for the £1 million allowance. The £2.5 million version raises less, and its revised costing is being incorporated into the next Office for Budget Responsibility forecast, so the current-policy revenue path was not yet published as a full profile at the date of this briefing.
| Tax year | Estimated revenue (£1m basis) |
|---|---|
| 2026-27 | +£230m |
| 2027-28 | +£495m |
| 2028-29 | +£520m |
| 2029-30 | +£520m |
Source: gov.uk, HMRC policy paper, 21 July 2025. UK-wide. These are the superseded £1m-basis figures; the £2.5m version raises less (gov.uk, 23 December 2025).
Original synthesis
The following two analyses combine public datasets. Each is a derived estimate for illustration, not an official statistic, and each is labelled as such with its inputs and limitations.
1. Where the £2.5m allowance sits in the claim distribution
Combining two HMRC datapoints places the new allowance against the historic spread of claims.
Logic: HMRC reports 93% of agricultural claims and 96% of business claims were below £2.5 million in 2021-22, while the government forecasts around 85% of agricultural-relief estates pay no more inheritance tax in 2026-27. The allowance therefore sits near the 93rd percentile of agricultural claim values, and the gap between 93% "below £2.5m" and 85% "no more tax" reflects estates that combine agricultural and business assets or exceed the threshold once all assets are counted.
Inputs: gov.uk / HMRC distribution, 2021-22; gov.uk 85% forecast, 2026-27.
Limitations: the two datapoints are different years (2021-22 versus 2026-27) and different bases (claim value versus tax paid). The percentile reading is an interpretation, not a published figure.
2. A relief-concentration ratio, APR versus BPR
A simple concentration ratio expresses how far the largest claims exceed their proportionate share of cost.
Formula: (share of cost) ÷ (share of claims). Agricultural relief: 40% ÷ 7% ≈ 5.7, so the top 7% of agricultural claims took about 5.7 times a proportionate share in 2021-22. Business relief: 53% ÷ 4% ≈ 13.3, so the top 4% of business claims took about 13 times a proportionate share. Business relief is the more concentrated of the two.
Inputs: gov.uk / HMRC top-claim shares, 2021-22.
Limitations: a crude ratio based on cost, not asset value; single year; sensitive to how bands are defined. Not a Gini or formal inequality measure. Illustrative only.
Recommended charts
Four chart specifications a journalist or analyst could build from the sourced data above. Data and insight are described; no images are embedded.
- Claim distribution vs the threshold. Bar chart of the share of agricultural (93%) and business (96%) claims below £2.5m, 2021-22. Source: gov.uk/HMRC. Insight: most claimants sit below the new allowance. Citation-worthy because it shows who is and is not affected.
- Relief concentration. Grouped bars of top-claim share of claimants (7% APR, 4% BPR) against share of cost (40% APR, 53% BPR), 2021-22. Source: gov.uk/HMRC. Insight: a few large claims absorb much of the cost. Citation-worthy as the reform's central rationale.
- Estates affected. Stacked bar of 185 agricultural, 915 business-only, and the ~85% unaffected share, 2026-27. Source: gov.uk. Insight: scale of who pays more. Citation-worthy as the disputed headline count.
- Median claim vs allowance. Bar of median agricultural (£486,000) and business (£200,000) claims against the £2.5m line, 2021-22. Source: gov.uk/HMRC. Insight: the typical claim is far below the cap. Citation-worthy for scale.
Methodology
Source selection. Primary government and official statistics were preferred: HMRC and HM Treasury via gov.uk for the policy and relief distribution, Defra for farm structure, and the HMRC policy paper for the original revenue scoring. Institute for Fiscal Studies analysis of HMRC data was used for aggregate relief cost. Only sources whose figures could be confirmed at their named source were retained.
Inclusion and exclusion. A statistic was included only where its figure, year and geography could be stated and an original source linked and confirmed. Figures that could not be tied to, or verified against, a named source were excluded, including previously cited Savills per-acre farmland values that could not be confirmed at source. The superseded £1 million allowance and any "not transferable" wording were excluded as current policy and flagged where they still appear on older gov.uk pages.
Handling conflicts. Where sources differed, the more recent official figure was used and the discrepancy flagged, as with the HMRC estimate of up to 1,100 affected estates against the Country Land and Business Association figure of around 70,000 farms. The two HMRC distribution figures were cross-checked against IFS totals, and the check is reported in the distribution section.
Estimates. Every derived number in the synthesis is labelled as an estimate, with its formula, inputs and limitations. Derived figures are not presented as official statistics.
Last updated. July 2026. Figures are subject to change, particularly the revenue path, which awaits a revised OBR costing for the £2.5 million policy.
Source quality ranking
| Source | Used for | Tier |
|---|---|---|
| HM Treasury / gov.uk (23 Dec 2025) | £2.5m allowance, transferability, 85% forecast | Tier 1 · government |
| HMRC / gov.uk (updated 3 Mar 2026) | Claim distribution, medians, estates affected | Tier 1 · government |
| HMRC policy paper / gov.uk (21 Jul 2025) | Original revenue scoring, share of estates | Tier 1 · government |
| Defra agricultural facts | Farm holdings, area, average size | Tier 1 · official statistics |
| gov.uk inheritance tax | Nil-rate bands, rates, freeze | Tier 1 · government |
| Institute for Fiscal Studies | Aggregate relief cost, distribution analysis | Tier 1 · academic/institutional |
| House of Commons Library | Policy context, stakeholder claims | Tier 1 · parliamentary |
Tiering: Tier 1 primary government, official statistics and academic/parliamentary bodies; Tier 2 credible market research clearly attributed; Tier 3 reputable journalism or expert commentary. Every figure retained here is Tier 1; a previously cited Tier 2 market source (Savills farmland values) was removed because it could not be verified at source.
For journalists
Most quotable statistics
- "From 6 April 2026, 100% farm and business inheritance tax relief is capped at the first £2.5 million per person, £5 million per couple." (gov.uk, 23 December 2025, UK)
- "Around 85% of estates claiming agricultural relief in 2026-27 are forecast to pay no more inheritance tax." (gov.uk, 23 December 2025, UK)
- "HMRC expects up to 1,100 estates to pay more inheritance tax in 2026-27: up to 185 farming, up to 915 business-only." (gov.uk, updated 3 March 2026, UK)
- "The median agricultural relief claim was £486,000 in 2021-22, far below the new £2.5 million cap." (gov.uk/HMRC, updated 3 March 2026, UK)
- "40% of agricultural relief went to the top 7% of claims in 2021-22, 117 estates sharing £219 million." (gov.uk/HMRC, updated 3 March 2026, UK)
- "53% of business relief went to the top 4% of claims in 2021-22, 158 estates sharing £558 million." (gov.uk/HMRC, updated 3 March 2026, UK)
- "England had 102,300 commercial farm holdings in 2024, averaging 87 hectares each." (Defra, 2024, England)
Data limitations
The estates-affected counts are HMRC maximums assuming no behavioural change and may overstate the eventual total. The revenue path shown is the superseded £1 million scoring; the £2.5 million costing awaits the next OBR forecast. The claim-distribution figures are for 2021-22 and predate the reform. The synthesis figures are derived illustrations, not official statistics.
Recommended dataset fields
For a downloadable companion dataset: tax_year; relief_type (APR/BPR); metric (median_claim, share_below_2_5m, top_claim_count, top_claim_relief_gbp, share_of_cost); value; geography; source_name; source_url; official_or_estimate; last_updated.
Press summary (approx. 150 words)
From 6 April 2026 the United Kingdom caps 100% agricultural and business property relief from inheritance tax at the first £2.5 million of combined qualifying assets per person, with 50% relief above that and full transferability between spouses and civil partners, worth up to £5 million per couple (gov.uk, 23 December 2025). The £2.5 million figure, announced on 23 December 2025, replaced an earlier £1 million allowance. HMRC forecasts that around 85% of estates claiming agricultural relief in 2026-27 will pay no more inheritance tax, with up to 1,100 estates paying more: up to 185 farming and up to 915 business-only (gov.uk, updated 3 March 2026). HMRC data for 2021-22 shows most claims are modest, a median £486,000 for agricultural relief, while the largest claims absorb most of the cost. England had 102,300 commercial farm holdings in 2024 (Defra).
Five suggested headlines
- Farm and business inheritance tax relief capped at £2.5m from April 2026
- HMRC data: 93% of farm relief claims sit below the new £2.5m cap
- Up to 1,100 estates to pay more inheritance tax under 2026 relief reform
- The numbers behind the farm inheritance tax reform, sourced and checked
- £5m per couple: how the transferable relief allowance works from 2026
Frequently asked questions
What is changing for agricultural and business property relief in 2026?
From 6 April 2026, 100% agricultural property relief and business property relief applies to the first £2.5 million of combined qualifying assets per person, with 50% relief on value above that (gov.uk, HM Treasury, 23 December 2025). Before this date, qualifying assets could attract 100% relief with no upper limit. The change applies UK-wide to deaths on or after 6 April 2026.
Is the £2.5 million allowance transferable between spouses?
Yes. The £2.5 million allowance is transferable between spouses and civil partners, including where the first death occurred before 6 April 2026, giving up to £5 million of qualifying agricultural and business assets per couple (gov.uk, 23 December 2025). This transferability was confirmed on 23 December 2025 and differs from earlier proposals that described the allowance as non-transferable.
How many estates will actually pay more inheritance tax?
HMRC estimates up to 1,100 estates across the UK will pay more inheritance tax in 2026-27 because of the reform: up to 185 claiming agricultural relief and up to 915 claiming only business relief (gov.uk, updated 3 March 2026). The estimate assumes no behavioural change and is described as a maximum. Around 85% of agricultural-relief estates are forecast to pay no more.
Why do some sources say 70,000 farms are affected?
The Country Land and Business Association has argued the changes could affect around 70,000 farms (House of Commons Library, briefing CBP-10181, 2025). That figure counts farm businesses potentially in scope over time, not estates taxed in a single year. HMRC's up-to-1,100 figure counts estates at death in 2026-27 with a taxable transfer (gov.uk, updated 3 March 2026). The two measure different things.
What was the median relief claim before the reform?
In 2021-22, the median agricultural relief claim was £486,000 and the median business relief claim was £200,000 (gov.uk, HMRC data, updated 3 March 2026). Both sit well below the new £2.5 million allowance, which is why HMRC expects most claimant estates to be unaffected. These figures are UK-wide and pre-date the reform.
How concentrated was the cost of the reliefs?
In 2021-22, 40% of the cost of agricultural relief went to the top 7% of claims, 117 estates sharing £219 million, and 53% of business relief went to the top 4% of claims, 158 estates sharing £558 million (gov.uk, HMRC data, updated 3 March 2026). This concentration in the largest claims is the pattern the reform is designed to address. Figures are UK-wide.
What does the reform raise for the Exchequer?
The original £1 million-based reform was scored to raise about £520 million a year by 2029-30 (gov.uk, HMRC, 21 July 2025). The £2.5 million version raises less, and the government has said the revised costing will be taken into the next Office for Budget Responsibility forecast (gov.uk, 23 December 2025). The current-policy revenue path was not published as a full profile at the date of this briefing.
Do the standard inheritance tax allowances still apply?
Yes. The nil-rate band remains £325,000 and the residence nil-rate band up to £175,000, both frozen until 5 April 2031 following a one-year extension at Budget 2025 (gov.uk, as at July 2026). These allowances apply alongside the £2.5 million relief allowance, not instead of it, and the standard inheritance tax rate remains 40%.
Does this apply in Scotland and Northern Ireland?
Inheritance tax, including agricultural and business property relief, is a UK-wide tax, so the £2.5 million reform applies across the United Kingdom (gov.uk, 23 December 2025). Succession law differs between England and Wales, Scotland and Northern Ireland, but the relief rules themselves are set at UK level. This briefing uses England and Wales as its default for wider estate-planning context.
Related reading: estate planning: a complete UK guide, inheritance tax explained, and agricultural property relief.