Business and Agricultural Relief: Cost to the Exchequer

Business property relief and agricultural property relief together cost the Exchequer several billion pounds a year in Inheritance Tax not collected. HMRC estimated business property relief at around £1,400 million and agricultural property relief at around £1,150 million in 2024 to 2025 (HMRC tax relief statistics, as at July 2026, subject to change).

This is a data piece. It sets out the published official figures on the cost of these two Inheritance Tax reliefs, how concentrated the largest claims are, and what the reforms taking effect from 6 April 2026 are forecast to do. It draws only on named official sources, chiefly HMRC statistics and HM Treasury and HMRC policy publications, each cited at the point of use. It sits alongside our Inheritance Tax Explained guide, our reference on business property relief, and our wider estate planning guide. Figures are current as at July 2026 and are subject to change. Inheritance Tax applies across the UK; where surrounding rules differ by nation, that is flagged.

What are business and agricultural relief?

Business property relief and agricultural property relief are Inheritance Tax reliefs that reduce the taxable value of qualifying business or farming assets when someone dies or makes certain transfers. Business Relief can currently apply at 100% to a business, an interest in a business or shares in an unlisted company, and at 50% to some assets such as land, buildings or machinery used in a business the deceased controlled (gov.uk, as at July 2026, subject to change).

Because these reliefs remove value from the estate before Inheritance Tax is worked out, they represent tax the Exchequer does not collect. The standard Inheritance Tax rate on value above the available threshold is 40%, reduced to 36% where at least 10% of the net estate passes to charity, and the main nil-rate band remains £325,000 (gov.uk, as at July 2026, subject to change). The reliefs sit on top of those thresholds for qualifying property.

Key figures at a glance

The cost of the two reliefs, and how concentrated the largest claims are, both show up clearly in the published data. Each row below is a statistic from a named official source, with its reference period and a link. Business property relief was estimated at around £1,400 million and agricultural property relief at around £1,150 million in 2024 to 2025 (HMRC, as at July 2026, subject to change).

All figures as at July 2026 and subject to change. Cost figures are UK-wide; the claim-concentration and reform figures are drawn from the HMRC and HM Treasury reforms publication.

Where the cost goes

The published data shows the cost of both reliefs is concentrated in a small number of large claims. In 2021 to 2022, the top 4% of business property relief claims, just 158 estates, accounted for 53% of the relief's cost, £558 million, while the top 7% of agricultural property relief claims, 117 estates, accounted for 40% of that relief's cost, £219 million (HMRC/HM Treasury, as at July 2026, subject to change).

By contrast, typical claims are far smaller. The median value of assets qualifying for business property relief was £200,000, and for agricultural property relief £486,000, in the same year; 87% of estates claimed business property below £1 million, and 73% of estates claimed agricultural property below £1 million (HMRC/HM Treasury, as at July 2026, subject to change). The table below sets these distribution figures side by side.

Per HMRC and HM Treasury reforms publication, 2021-22, as at July 2026, subject to change. UK-wide.

The 2026 reforms in numbers

The government has published its own estimate of who is affected. Reflecting the £2.5 million allowance, the reforms are expected to result in up to 1,100 estates across the UK paying more Inheritance Tax in 2026 to 2027. Of these, up to 185 estates claim agricultural property relief (including those also claiming business property relief) and up to around 915 estates claim only business property relief (HMRC/HM Treasury, as at July 2026, subject to change).

Per HMRC and HM Treasury reforms publication, 2026-27 forecast, as at July 2026, subject to change. UK-wide. Forecasts can be revised at any fiscal event.

What the numbers mean

Read together, the figures describe two reliefs that are individually costly but very unevenly used. Combined, they were estimated to remove around £2.55 billion of Inheritance Tax from the Exchequer in 2024 to 2025, yet the published breakdown for 2021 to 2022 shows a small group of large estates accounting for a disproportionate share, while most claims are for far smaller sums (HMRC, as at July 2026, subject to change).

That pattern helps explain the design of the 2026 reforms, which apply a £2.5 million allowance per person (transferable between spouses and civil partners, up to £5 million per couple) before the rate on qualifying property above it drops to 50% relief. On the government's own forecast, the change affects a small number of estates, up to 1,100 across the UK in 2026 to 2027 (HMRC/HM Treasury, as at July 2026, subject to change). Whether any of this touches a particular family, farm or business depends entirely on the value and make-up of their assets and how they are held, so it can be worth discussing the figures and the new rules with a qualified professional rather than reading a national trend as a personal outcome. These are forecasts and can change at any fiscal event.

Scotland, Wales and Northern Ireland

Inheritance Tax is a UK-wide tax, so business property relief, agricultural property relief, the £2.5 million allowance and the reforms from 6 April 2026 apply the same way in England, Wales, Scotland and Northern Ireland (gov.uk, as at July 2026, subject to change). What differs across the nations is the surrounding law, such as succession and property rules and, in Scotland, distinct land tenure and legal rights, which can affect how a business or farm is owned and passed on. The statistics on this page are collected UK-wide and are not broken down by nation.

Sources and methodology

Every figure on this page comes from a named official source and was checked against that source before publication. No number has been estimated, rounded beyond the source, or extrapolated. Cost figures are HMRC estimates of tax foregone and, for later years, forecasts; where a figure is a forecast it is described as such. The sources used are listed below with their reference periods.

• Cost of the reliefs: HMRC tax relief statistics (January 2026) (business property relief ~£1,400m and agricultural property relief ~£1,150m in 2024-25; ~£1,500m and ~£1,220m forecast for 2025-26).
• Claim concentration and medians: HMRC and HM Treasury, reforms publication (top-claim shares, 158 and 117 estates, £558m and £219m, medians of £200,000 and £486,000, all 2021-22).
• Reform impact: HMRC and HM Treasury, reforms publication (up to 1,100 estates; up to 185 and up to around 915 estates, 2026-27 forecast; £2.5 million allowance and 50% rate above it).
• Relief mechanics and the £2.5m allowance: gov.uk, What qualifies for Business Relief (100% and 50% rates; £2.5 million per-person allowance for 100% relief, transferable between spouses and civil partners, for deaths on or after 6 April 2026; £2.5 million figure confirmed 23 December 2025, superseding the £1 million announced at Autumn Budget 2024).
• Core rates and threshold: gov.uk, Inheritance Tax (£325,000 nil-rate band, 40%/36% rates).

Frequently asked questions