I was recently asked to give a talk on Inheritance Tax (IHT) to the Farming Community Network (FCN) attheir nearby NFU offices.  They were rightly concerned with the proposed changes to IHT, many asking how the farming community will survive this.

 

My talk started by explaining if a farmer sadly passes away before 6 April 2026 then things remain relatively unchanged from an IHT perspective.  However, passing away on or after 6 April 2026, the amount of Agricultural Property Relief (APR) and Business Property Relief (BPR) at 100% is to be capped at £1m per person, with just 50% relief applied to any excess.  We now have a bit more detail with HMRC releasing technical guidance on 27 February 2025.

 

Recent lobbying at Westminster showed the 2024 budget had an enormous impact nationwide and has generally been detrimental to farmers’ morale.  However, a more upbeat comment from an FCN memberat my talk was:

 

“if there are any positives to take, it has given the younger generation of farmers a platform to start asking for succession planning to begin now”.

 

My experience so far is the fear of a 40% IHT liability has certainly encouraged older asset holders to engage in conversation much earlier than anticipated.

 

In my talk I walked FCN members through a well-trodden example of a married couple with a £4m estate, everything jointly owned, all assets relievable for APR and/or BPR, etc.  I explained with careful tax planning the result can still mean no IHT is payable.  Despite this more positive outcome, it is not a one size fits all solution.

 

Moving the “solution” onto an estate worth say £6m the result was an eye watering IHT liability of £540,000!!!  Many think £6m is not an unreasonable figure for a farm with current land and property values.  The majority of farmers cannot afford to pay this tax without then selling land and/or property.  The result can mean breaking up the family farm or asking farmers to use all their hard earned profits to pay IHT instalments for 10 years.

 

The conclusion from my talk and my advice is to:

 

1. Try and engage in succession conversations now, even if difficult.
2. Review your wills and partnership agreement and begin to update.
3. Speak to your professional advisors and get a rough idea on valuations.
4. Look out for the Spring forecast on 26 March 2025.

 

For more information or advice on how the changes will affect you, please contact me or your usual A C Mole contact.