The October 2024 budget changed the rules around Agricultural Property Relief (APR) and Business Property Relief (BPR), fundamentally altering how estates with farmland, livestock or agricultural businesses plan for inheritance and succession. These reforms mean that more farms now face a real risk of increased Inheritance Tax (IHT) exposure, and precise valuation of all assets, including machinery and livestock, will become more important.
Under the revised regime, APR and BPR no longer automatically apply in full. Instead, relief is being capped: only the first £1 million of qualifying agricultural or business property will receive 100% relief, with any excess being granted more limited relief (50%). This change affects a wide range of estates, from working farms to diversified holdings with substantial plant, equipment or trading value. The November 2025 Budget amended the proposals to allow transfer of the £1million allowance between spouses, but the majority of farms are still likely to have increased exposure to IHT.
As 100% relief is limited to £2m, probate/IHT valuations must from April 2026 take full account of the value of non-land assets including farm machinery and livestock, which under current rules did not have to be considered in detail as 100% BPR was generally available for them. These items often represent a sizeable portion of a farm business’ overall value and can push the estate’s total above the £1million/£2 million cap.
Why does an accurate valuation matter? Because machinery and livestock, unlike land, tend to depreciate, are more subject to market fluctuation, and may not meet the same long-term holding criteria required for APR/BPR. An outdated or informal valuation of livestock or machinery could significantly understate or overstate their worth leading to unexpected IHT bills or challenges from HMRC.
For family farms, the best way to mitigate this is to instruct a full valuation as soon as possible after the date of death, to capture the asset position as it was as near as possible to the relevant valuation date for IHT. A formal, up-to-date valuation provides a defensible snapshot of value on the date of death or transfer, essential to support any IHT relief claim. Trying to recollect or prove what the asset position was a number months, or even years, after the date of death will generally be a very hard task.
Moreover, proper valuation can inform estate planning strategies. For instance, farmers might want to restructure holdings, separate land and trading assets, or transfer machinery/livestock ahead of time, to stay within the relief thresholds. Alternatively, trusts or lifetime gifts might be considered, though these come with their own tax and capital-gains implications.
In short, the new APR and BPR rules mean that farms and rural estates can no longer take IHT tax relief for granted. Machinery and livestock are likely to be just as important to value as land itself. Without careful, up-to-date valuations, families risk leaving substantial tax bills for the next generation, undermining the financial security of the farm.
Howkins & Harrison can provide full valuation services for all agricultural and business assets, including land, houses, buildings, livestock, machinery and trading stock. Our valuers are members of the RICS and are also qualified members of the Central Association of Agricultural Valuers (CAAV). We can also deal with queries and negotiate values with HMRC where necessary.
By James Collier
