In short: since 6 April 2026, the 100% inheritance tax relief on agricultural and business property is limited to a combined £2.5 million per person, with 50% relief on qualifying value above that. Unused allowance can pass to a surviving spouse or civil partner. Letting farm buildings to non-farming businesses can matter here: a building let for business use is generally no longer used for agriculture, so it may not qualify for agricultural relief. Letting is also usually treated as an investment activity for business relief. Take advice before you let, especially if your estate is near or above the allowance.
What changed
Finance Act 2026 brought in the reforms to agricultural property relief (APR) and business property relief (BPR). HMRC's guidance on agricultural relief explains that for deaths on or after 6 April 2026:
- a £2.5 million allowance applies to 100% relief from agricultural and business relief combined;
- where the total value of qualifying property exceeds £2.5 million, the excess receives 50% relief;
- unused allowance of a deceased spouse or civil partner can be transferred, so a couple can pass on up to £5 million of qualifying property with 100% relief.
The government originally proposed a £1 million allowance. It announced the increase to £2.5 million in December 2025 (ATT).
Why letting buildings matters
Agricultural relief applies to agricultural property, such as land, farm buildings and farmhouses, that is occupied for agricultural purposes, and only to its agricultural value. A barn let to a joiner or used for commercial storage is no longer occupied for agriculture. So it is unlikely to qualify for agricultural relief while it is let that way.
Business relief isn't normally available where a business consists wholly or mainly of holding investments, and letting property is generally treated as an investment activity. Diversified farms that combine a trading farm business with some lettings can sometimes qualify as a whole. Whether they do depends on the facts, and HMRC looks closely at the balance of activities.
So letting spare buildings can change how much of the farm attracts 100% relief. With the new £2.5 million cap, that matters for more families than before.
What to consider before letting
- Talk to your accountant or tax adviser about how letting a building affects your estate's relief, especially if the farm is valued near or above £2.5 million (or £5 million for a couple).
- Keep good records of what each building is used for, and when.
- Consider the length of the letting. Shorter lettings keep more flexibility to return a building to agricultural use.
- Weigh income against tax. For many farms, the rent from a spare building is well worth having. The point is to decide with the tax effects in view.
Our guide on how to rent out an unused farm building covers the other checks: planning, business rates and leases.
Frequently asked questions
What is the farm inheritance tax allowance from April 2026?
£2.5 million per person for 100% relief on agricultural and business property combined. Qualifying value above that gets 50% relief. Unused allowance can be transferred to a surviving spouse or civil partner.
Does a let farm building qualify for agricultural property relief?
Generally not, if it is let for a non-agricultural use such as storage, a workshop or an office, because it is no longer occupied for agricultural purposes. A building let to another farmer for farming can still qualify.
Can business property relief apply to let farm buildings?
Not usually on its own, because letting is generally an investment activity. A diversified farm business may qualify as a whole in some cases. Take professional advice on your circumstances.
This article is general information about UK inheritance tax as at October 2026, not tax advice. Inheritance tax outcomes depend on individual circumstances; consult a qualified adviser.
Photo credits
Photographs are reproduced under Creative Commons licences and have been resized and cropped.
- Farmland near Ford Village by Billy McCrorie, licensed under CC BY-SA 2.0
