The possible abolition of Agricultural Property Relief in the next government budget could have significant financial implications for landowners, particularly landlords.If APR is abolished, inheritance tax liabilities could increase substantially, with a farm valued at £2 million facing an estimated tax bill of £600,000.
Pre-election, the then Defra Secretary Steve Barclay warned that Labour were ‘secretly planning to scrap inheritance tax relief for farmland’. APR currently offers significant inheritance tax relief for family farms. I advise landowners to carefully consider alternative options to their land management strategies, perhaps moving from FBT agreements to share or contract farming agreements. This shift can help reclassify the farm as a trading entity, making it eligible for the other important relief - Business Property Relief , upon death. The landowner would need to have been actively trading in business for two years to claim this relief on business assets.