This Budget leaves British farming steadier, but still far from secure

By no means was anyone under the impression that this Budget would be a reversal of last year’s Inheritance Tax (IHT), but the community had their fingers crossed for an increase in the nil rate band which unfortunately didn’t come.

Relief Caps

The farming industry was also hoping that the level of Agricultural Property Relief (APR) and Business Property Relief (BPR) would be increased from decisions made last year. However, the Chancellor capped that 100% relief at £1 million, and relief at 50% thereafter.

For larger farms, where estates and business assets breach that £1m threshold, only half of the excess now qualifies for IHT relief, meaning farms that were previously fully sheltered can now face sizeable tax bills when passing from one generation to the next. That inevitability makes generational succession less straightforward and pushes many farms into urgent restructuring and professional planning.

While the Chancellor’s intention may have been to catch only a handful of very large claimants, the move does little to support the Government’s own ambition of drawing in and supporting a new wave of young farmers. If anything, uncertainty around future tax exposure risks a reduction in investment in a sector already stretched by rising costs and a volatile market.

Transferable Relief

On a more positive note, reforms to APR and BPR to make it so any of that £1 million which goes unused can be transferable to spouses and partners from a deceased individual. Encouragingly, this has been instigated in a retrospective manner, so despite the law not passing until the 6th of April 2026, any deaths that occur before that date will still be included, offering real breathing room.

This materially softens the blow of the £1m cap for many family farms, as married couples can effectively protect up to £2m of qualifying APR and BPR assets from IHT upon the second death. That transferability, and its retrospective application, improves short-term stability for many family farms and reduces the immediacy of forced sales following bereavement. t’s a step that should help steady the ship for many long-established businesses and give them a clearer runway for long-term planning and investment.

Still, it’s not a universal cure: single owners and larger estates remain exposed, and the sector will need to keep a close eye on how these rules interact with broader food security goals, and the long-term capital stability farming depends on.

A Mixed Bag

All in all, this Budget does give farming a clearer view of the road ahead, even if it’s not quite the smooth, well-paved route many had hoped for. With several of the new caps and policies now set in stone until at least 2031, the sector does at least gain a degree of predictability, and the transferability of unused relief does offer helpful clarity for many. Yet broader relief caps still tightening around larger estates have left the industry with a mixed picture. For now, British farming remains on its feet but still waiting for the solid ground that would allow it to stride forward with confidence.

Sarah Jordan, Partner in Real Estate, Landed Estates and Farming, Rural Services at Moore Barlow

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