Milsted Langdon has welcomed the recent Government decision to raise the threshold for Agricultural Property Relief (APR) and Business Property Relief (BPR) to £2.5 million.

However, it warns that while the increase is a positive development, it does not go far enough to address the ongoing challenges faced by many farmers and business owners.

The increase, which comes into effect from 6 April 2025, follows widespread concern about the original cap, which had limited full APR and BPR relief to £1 million, potentially forcing many asset-rich, cash-poor businesses to sell valuable assets to cover tax liabilities.

Mike Bagg, Tax Partner at Milsted Langdon, comments:
“While the increase in the APR and BPR cap to £2.5 million is a step in the right direction, it remains an incomplete solution.

“Farmers and business owners have long struggled with the mismatch between the high asset value of their businesses and their limited cash flow.

“For many, the issues caused by the previous cap haven’t been entirely solved. The risk of a business sale due to tax liabilities is still very much present, particularly those with growth ambitions.”

Mike points out that while the changes will undoubtedly provide some immediate relief to smaller family businesses, the cap of £2.5 million may still prove insufficient for many successful farms and enterprises that have expanded significantly.

“APR and BPR were originally designed to protect the continuity of family businesses, yet even with the increase, the cap will limit the ability of growing businesses to thrive without having to plan for complicated tax strategies,” explains Mike.

“We must remember that many of these businesses are asset-rich but cash-poor. A tax liability upon death could still force them to sell off key assets like land or property to pay the tax, even where they are given more time to pay as it proposed, threatening the future stability of their businesses,” he adds.

Despite these concerns, the new rules from last year’s Autumn Budget also allow the relief to be passed on between spouses or civil partners, which Mike acknowledges as a welcome development.

However, he emphasises that this change, while positive, still doesn’t address the fundamental issue of taxation on succession if families don’t have the cash to settle their bill.

“The ability to transfer relief between spouses or civil partners will help some families, but it does not solve the deeper issue at hand here.

“The fact remains that businesses should not be taxed on inherited assets unless they are sold. It puts so many in these sectors at an unfair disadvantage.”

Milsted Langdon is advising clients to take this opportunity to review their succession plans and ensure that their structures are aligned with the new rules.

While the higher cap may offer some relief, Mike cautions that planning remains essential, particularly in light of the continued uncertainty surrounding tax policy.

“The Government’s approach to APR and BPR continues to evolve, but it’s clear that proper planning and flexibility are key.

“Business owners, especially those in the farming and property sectors, need to revisit their estate plans to ensure they are prepared for any future changes,” concludes Bagg.

Milsted Langdon’s experienced team of advisers is available to help clients with tax planning, succession planning and the complexities of APR and BPR. To find out more about their specialist tax services, please contact our team.