What is agricultural property relief?
Agricultural property relief reduces the value of qualifying farmland and farm buildings for inheritance tax. Since 6 April 2026 it shares a single £2.5 million 100% relief allowance with business property relief, with relief on value above that limited to 50%.
Relief applies to the agricultural value of the land — its value for agricultural use, not its development or amenity value. The gap between the two is often where the tax sits.
Occupation tests apply: broadly, two years where the owner farms the land themselves, seven years where it is farmed by someone else. Farmhouses only qualify where they are of a character appropriate to the land, which is heavily litigated.
The allowance is shared with business property relief rather than sitting alongside it, so a farming family with both land and a trading company draws on one pot. It is transferable between spouses, giving up to £5 million for a couple, and index-linked from April 2031.