Inheritance Tax and Agricultural Land: Navigating the 2026 Reforms and Valuation Challenges

The Complexities of Valuing Agricultural Land for IHT

Valuing agricultural land and property for IHT purposes in the UK has always required a nuanced approach—balancing market conditions, land use, and an evolving legal and tax framework. APR currently provides up to 100% IHT relief on the agricultural value of qualifying land and buildings, subject to conditions such as active agricultural use over a minimum period. Meanwhile, BPR can offer relief of 50% or 100% on qualifying business assets, including farming operations that fall outside the scope of APR.

One of the main challenges for valuers lies in differentiating between agricultural value and “hope” or non-agricultural value. Land with potential for development, diversification, or long-term uplift may command a premium in the open market. However, APR applies strictly to the agricultural component. Accurately determining which portion of land qualifies for relief requires both deep sector knowledge and comprehensive documentation—ranging from planning histories to tenancy agreements and financial accounts.

What the 2026 Reforms Mean for Landowners and Valuers

From April 2026, significant restrictions to both APR and BPR will come into effect. Notably, APR will no longer apply to land not actively used in a genuine farming business, tightening eligibility and increasing pressure on landowners with non-traditional or diversified operations.

Diversified income streams—such as holiday lets, glamping businesses, and renewable energy installations—commonplace in today’s rural estates, may no longer qualify under the revised APR and BPR rules. This blurring of commercial boundaries poses serious valuation challenges, requiring careful assessment of how these activities are integrated into the broader farming enterprise.

Additionally, assets such as farm machinery, livestock & fodder will fall within a new £1 million cap on relief, further complicating succession planning and asset structuring for larger farming businesses.

Planning Ahead: Strategic Preparation Is Essential

In light of these forthcoming reforms, proactive succession and tax planning is critical. Landowners should engage early with professional valuers and advisers to assess the potential impact on their estates and develop strategies to preserve available reliefs. The emphasis on producing accurate, well-supported valuations will be greater than ever, particularly as HMRC scrutiny intensifies.

Supporting Clients Through Change

At Morris Marshall & Poole, we combine decades of experience in rural consultancy with in-depth expertise in valuations for farms, land, livestock, and machinery. We are committed to helping clients navigate these legislative changes with confidence—supporting long-term planning and protecting the future of rural businesses.

If you require advice or are uncertain about how these changes may impact your farming business, please don’t hesitate to get in touch with a member of our team.