What is Agricultural Property Relief (APR)?

Short answer: Agricultural Property Relief (APR) is an inheritance tax relief that reduces the taxable value of qualifying agricultural property, often to nil. It applies to farmland, farm buildings and farmhouses that meet the rules, but only to their agricultural value. 

What property can qualify?

•      Agricultural land and pasture used to grow crops or rear animals.

•      Farm buildings used for agriculture.

•      Farmhouses and farm cottages that are of a character appropriate to the land and occupied for agriculture.

•      Woodland and buildings used for intensive livestock or fish farming, where occupied with the agricultural land.

•      Since April 2025, land managed under certain environmental agreements with a public body, where it previously qualified for APR.

The ownership and occupation rules

To qualify, the property must have been either:

•      occupied by you for agriculture for at least 2 years before the death or gift; or

•      owned by you for at least 7 years and occupied for agriculture (by you or someone else, such as a tenant) throughout that time.

100% or 50% relief?

Relief is generally 100% where the owner farms the land, has vacant possession (or can get it within 12 months), or the land is let on a tenancy starting on or after 1 September 1995. Some older tenancies attract 50%.

What changed in April 2026?

•      100% relief now applies to the first £2.5 million of combined agricultural and business property per person.

•      Above that, relief is 50%, giving an effective inheritance tax rate of 20%.

•      Any unused allowance can be transferred to a surviving spouse or civil partner.

•      Tax on qualifying agricultural and business property can be paid in 10 equal annual instalments, interest-free.

What is "agricultural value"?

APR only applies to the property's agricultural value. This is the value it would have if it could only ever be used for agriculture. It ignores development or "hope" value, and it ignores the premium that somebody might have to use pasture as a pony paddock. 

This is why farm estates often need two figures: the open market value and the agricultural value. With the new £2.5 million limit, getting these figures right is more important than ever.

How Fallows can help

We carry out assessments for Agricultural Property Relief nearly every week. We are very familiar with the rules, and what might constitute as allowable for APR purposes. We often help people long before a probate valuation is actually required, and support land owners with tax planning exercises. These are inexpensive, normally desktop valuations, that help farmers to calculate anticipated inheritance tax and to decide on how that tax can be best planned for.