UK increases inheritance tax threshold from USD1.3M to USD2.5 million

(MENAFN) The UK government has announced an increase in the inheritance tax threshold for agricultural assets, raising it from £1 million ($1.3 million) to £2.5 million ($3.3 million), following sustained pressure from campaigners and rural lawmakers. The change is set to take effect in April 2026 when the updated Agricultural and Business Property Reliefs are introduced.

The move reverses a plan announced last year by Treasury chief Rachel Reeves, which had proposed taxing inherited agricultural properties above £1 million at 20%, a proposal that sparked significant backlash. Critics had labeled it a “family farm tax”, arguing it would make it difficult for farmers to pass their land on to the next generation.

The adjustment comes after persistent lobbying by a group of Labour MPs advocating for a higher threshold. Environment Secretary Emma Reynolds said: "We have listened closely to farmers across the country and we are making changes today to protect more ordinary family farms."

The National Farmers' Union welcomed the decision, calling it “a huge victory for British farmers.”

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