Inheritance Tax & Family Farms NI: APR/BPR Changes from April 2026 Explained

If your family owns farmland in Northern Ireland, you’ve probably heard the noise about inheritance tax changes. Some of it has been alarmist. Some of it has been vague. Here’s what’s actually happening.

From 6 April 2026 — weeks away — the rules around Agricultural Property Relief (APR) and Business Property Relief (BPR) are changing. These reliefs have allowed farming families to pass land and business assets to the next generation without an inheritance tax bill. For most farms, that protection continues. But it now has a ceiling. And if your estate exceeds it, or your will wasn’t drafted with the new rules in mind, your family could face a tax bill that wasn’t there before.

At J.J. Taylor & Co Solicitors, we’re already advising farming families across Armagh and Northern Ireland on what this means in practice. Here’s what you need to know.

Until now, qualifying agricultural and business property has been 100% exempt from inheritance tax. No cap. A farm worth £500,000 or £5 million — the relief applied in full.

From 6 April 2026, the 100% relief is capped at £2.5 million per person.

Above that threshold, you still get relief — but only at 50%. That means the portion above £2.5 million is taxed at an effective rate of 20%, rather than the standard 40%.

To put that in real terms:

·         A farm valued at £2.5 million or below: no inheritance tax. Same as before.

·         A farm valued at £3.5 million: the first £2.5 million is fully relieved. The remaining £1 million gets 50% relief, leaving £500,000 taxable at 40% = £200,000 in IHT.

·         A farm valued at £5 million: £2.5 million fully relieved. £2.5 million at 50% relief = £1.25 million taxable at 40% = £500,000 in IHT.

The existing nil-rate bands (£325,000 plus £175,000 residence nil-rate band) still apply on top of the £2.5 million APR/BPR allowance. So the total sheltered amount can be higher.

This is where planning matters.

The £2.5 million allowance is transferable between spouses and civil partners. If the first spouse to die doesn’t use their allowance (or uses only part of it), the unused portion passes to the surviving spouse.

That means a couple can shelter up to £5 million of qualifying farm and business assets between them — on top of their combined nil-rate bands.

But here’s the catch: this only works if your will is drafted correctly.

If your current will leaves everything to your spouse outright, the relief transfers to your spouse. But if it’s structured through certain trusts or if assets pass outside the will (such as joint tenancy), the position becomes more complicated. Wills drafted years ago on the assumption of unlimited APR may not be fit for purpose under the new rules.

Worse than average. Northern Ireland’s agricultural sector is disproportionately affected.

Government analysis shows that around a third of NI farms have a total land value exceeding £1 million. This is before accounting for stock and machinery. Those farms account for roughly 70% of farmed land, 86% of dairy cows, and 57% of beef cows. These aren’t hobby farms. They’re the backbone of the rural economy.

The original proposal was a £1 million cap. The increase to £2.5 million takes many smaller farms out of the firing line. But for mid-sized and larger operations — particularly dairy farms, where land values have risen sharply — the new cap still bites.

Yes. Any inheritance tax arising from these changes can be paid in equal instalments over 10 years, interest-free. That’s a meaningful concession. It means the next generation doesn’t have to sell land to pay the bill on day one.

But instalments still need to be planned for. If the farm’s income can’t cover the annual payments, you’re back to the same problem.

Let’s be blunt: the biggest risk isn’t the tax change itself. It’s that your will hasn’t been updated to reflect it.

We regularly see wills drafted on the assumption that APR would cover everything. No cap, no problem. That assumption is about to be wrong.

If you’re a farming couple, your wills need to be reviewed now — before 6 April — to make sure:

·         Both spouses’ £2.5 million allowances are being used, not wasted.

·         Asset ownership between spouses is structured to maximise relief.

·         The will doesn’t inadvertently route assets through structures that prevent the allowance from transferring.

·         Succession plans for the farm align with the new tax position.

This isn’t about complex tax avoidance. It’s about making sure your existing plans still work under the new rules.

The rules change on 6 April 2026. That’s weeks away.

If you own farmland or a family business in Northern Ireland, review your will and estate plan before 6 April. Ensure both spouses’ allowances and your APR/BPR position are up to date.

J.J. Taylor & Co Solicitors can help you navigate these changes. Get in touch if you have questions.