A national firm of solicitors has welcomed the Government’s decision to increase the inheritance tax (IHT) relief threshold for farmers from £1 million to £2.5 million from April 2026, saying it reflects a welcome recognition of the realities that family farms face.
David Maddock, partner at Clarke Willmott LLP in Taunton commented, “The revised threshold of £2.5 million per individual – or £5 million for spouses and civil partners – is therefore not only a relief, but a recognition of the economic structure of modern farming. Farmland values, essential machinery and necessary diversification assets often push even modest family farms above £1 million in value.”
However, he also stressed that while this is an important and positive recalibration, it is not a complete resolution. “For some larger but still family-run operations, particularly those with high-value land but low annual profit margins, the revised threshold may still present challenges,” David continued. “Representative groups have rightly pointed out that certain businesses, especially in regions where land is exceptionally expensive, may continue to be drawn into the tax net despite operating on tight margins. The conversation about fairness and sustainability must therefore continue.”
Similarly, land agents Knight Frank comment that while the UK farmland market ‘remains becalmed’, the government’s IHT U-turn could boost confidence.
According to the firm, the price of bare agricultural land remained virtually flat in the final quarter of 2025, taking the total fall in average values across England and Wales to just over 5per cent. An acre of average farmland is now worth just under £8,700. ‘Not since the second quarter of 2017 have prices fallen by over 5% in a 12-month period. However, given the state of grain markets, residential property markets and falling confidence in the government’s agricultural policies, it could be argued that this relatively limited drop highlights farmland’s resilience,’ the company said in a statement.
“The market remained fairly stagnant at the end of 2025 in line with the rest of the year,” added Will Matthews, head of farms and estates at Knight Frank. “While economic and political uncertainty around the world is driving up the price of gold to record highs, farmland seems to have lost some of its traditional safe-haven shine that caused prices to jump during previous periods of financial upheaval.”
Over the past five years, agricultural land’s 26 per cent increase in value has outperformed other property classes, including prime central London residential (-5 per cent) and the wider UK housing market (+19 per cent).
