Our farming clients know that tax increases may be necessary but are the changes to Inheritance Tax reliefs the right ones?
This is an industry that in many instances can’t control its prices, has seen its produce undervalued with subsidies over the years, been told not to use all their land for production and now asked to face a further tax burden and also asked to carry on feeding us. Feeding us all is something they have done for generations and want to continue to do and hopefully with proper planning they can.
The budget announcements around Agricultural Property Relief have rightly caused consternation in the farming community. Larger farming enterprises are also going to be hit by the changes to employer’s national insurance and increases in the national minimum wage. As an industry our farmers probably feel they are going to bear more than their fair share of filling the “black hole” in the nation’s finances.
Simplistically, Agricultural Property Relief and Business Property Relief are ways to pass on a family business to the next generation free of Inheritance Tax. This relief is now going to be removed and replaced with an allowance of £1m, to be set against agricultural and business assets with the excess over £1m receiving 50% relief before tax is charged at 40%. Assets will be the land and buildings together with but not limited to livestock, harvested and growing crops and machinery. Farmers are now faced with a potential tax charge that they weren’t previously expecting.
“Agricultural Property Relief and Business Property Relief are ways to pass on a family business to the next generation free of Inheritance Tax”
Nikki Cairns
The measures aren’t due to come in until April 2026. However, as you might expect with changes to tax rules, it’s not that straightforward.
Whilst there are things that can be done now, before 2026, farmers can still be caught by the new rules for plans put in place before the start date. It is important to begin planning as soon as possible and our team at Randall & Payne have started discussions with our farming clients to assist with tax planning around mitigating the impact of any future Inheritance Tax liability. Some of the conversations have been extremely emotional as generations come together to discuss the future.
Nikki Cairns – Randall & Payne
Nikki Cairns is partner and joint head of accounting services at Randall & Payne, and has an impressive and diverse portfolio of clients, with a focus on agriculture and hospitality.
Contact Nikki by calling 01242 776000 or emailing nicola.cairns@randall-payne.co.uk.
