Legal comment – IHT thresholds to rise to £2.5m for farmers and businesses

Following the government’s U-turn on business property relief, with IHT thresholds for farmland and business assets increasing from £1m to £2.5m, Paul Fairbairn, Head of Private Wealth at Cripps, a top 100 UK law firm, has shared the following:

“The government’s plan to raise the inheritance tax threshold on farmland and business assets is a further step in the right direction. The original £1m cap threatened smaller farms and family-run businesses with a tax burden that they were never built to withstand.

“Raising the threshold will protect many family farms and businesses, giving them the breathing space they need to plan for the next generation. Whilst it doesn’t completely reverse changes announced last year and due to come into force in April 2026, it’s a rare example of tax reform from this government that supports continuity rather than undermining it.

“It will, however, not go far enough to protect many trading businesses, which create jobs and drive economic activity. A full reversal of this misguided policy would have been a far better Christmas present.”