The end of a long-standing inheritance tax planning route
Since 6 April 2026, offshore ownership no longer offers the same tax protection for UK agricultural land. Previously, offshore structures offered some non-UK domiciled individuals (and since April 2025, non-long term UK residents) a way to keep UK agricultural land outside the inheritance tax (IHT) net. That has now changed.
This marks a significant narrowing of a planning route that has historically kept certain interests in UK farmland outside the UK IHT net. UK assets, including land and buildings, have always been treated differently. They are generally subject to UK IHT regardless of the owner's residence or domicile status.
Historically, some individuals sought to mitigate IHT exposure on UK property by holding it through an offshore company or partnership. Rather than owning the property directly, they owned an interest in the offshore structure. As that interest was itself a non-UK asset, it could fall outside the scope of UK IHT.
Legislation introduced in 2017 largely removed this planning opportunity for UK residential property. Broadly speaking, you would "look through" offshore structures and treat the underlying residential property as remaining within the scope of IHT.
Agricultural property was largely unaffected by those changes, although farmhouses, cottages and other residential buildings could still be caught by the residential property rules.
What has changed?
Finance Act 2026 extends these "look through" rules to UK agricultural property. As a result, UK agricultural land and buildings held through offshore companies or partnerships can now fall within the scope of UK IHT in much the same way as UK residential property.
The new rules apply by reference to the familiar IHT definition of agricultural property and are intended to ensure that ownership through an offshore structure does not, in itself, provide an IHT advantage. The legislation is drafted broadly and can apply not only where agricultural property is held directly through an offshore company or partnership, but also where it is held through more complex ownership arrangements involving multiple entities.
There is a limited exemption for very small interests in companies or partnerships. Broadly, interests representing less than 5% of the overall value of the relevant entity may fall outside the rules.
The changes also include anti-avoidance provisions aimed at loans connected with the acquisition of UK agricultural property. Without these provisions, it might have been possible for a non-long term resident individual to lend funds that were then used to acquire UK agricultural property, while the loan itself remained outside the scope of IHT. The legislation is designed to prevent that outcome in a range of circumstances.
Continuing exposure after a sale
The legislation also provides for a two-year "tail". In certain circumstances, where an interest representing UK agricultural property is disposed of and replaced with cash or other assets, the value may continue to be exposed to UK IHT for up to two years after the disposal.
What does this mean in practice?
The key message is that, from 6 April 2026, holding UK agricultural property through an offshore structure will generally no longer prevent that value from being subject to UK IHT.
The changes bring agricultural property much closer to the existing treatment of UK residential property and further reduce the scope for using offshore structures to shelter UK land from IHT.
Importantly, the new rules do not extend to all forms of UK property. UK commercial property may still be capable of qualifying as excluded property in some circumstances where it is held through an offshore structure by an individual who is not a long-term UK resident.
Anyone who holds UK agricultural land through an offshore company, partnership or similar structure should review their arrangements. Structures that may previously have offered IHT protection could now produce a very different outcome, and early advice may help identify whether any restructuring or succession planning should be considered.
How we can help
Our Private Client and Rural teams advise individuals, families and landowners on inheritance tax, succession planning and the ownership of agricultural property. With the rules around offshore structures and UK agricultural land having changed, reviewing existing arrangements can help identify potential IHT exposure and whether further planning should be considered.
If you have any queries about the changes, inheritance tax planning or the ownership of agricultural property, please contact Nick Dobbs or a member of our team.