Five key takeaways for farming businesses following the budget

After months of speculation, the Chancellor has announced changes to Agricultural Property Relief (APR) and Business Property Relief (BPR). These changes will have a significant impact on estate planning for many farms.

Chancellor Rachel Reeves announced in the autumn budget that the first £1m of combined business and agricultural assets will continue to attract no inheritance tax. But for assets over £1 million, inheritance tax will apply with a 50% relief at an effective rate of 20%.

Philip Whitcomb a partner at national law firm Clarke Willmott LLP, specialises in private client work and acts for a large number of farmers and landowners.

Philip said: “These changes are significant and farmers and landowners should be aware of the implications. Now is the time to review succession plans. These changes do not come in until 6 April 2026 so there is time to review, consider, budget, and where appropriate, adapt your plan.”

Here he has put together five key takeaways following the Autumn Budget:

1. Make sure you use the full availability of APR and BPR at the 100% rate on first death. This may mean making changes to your Will as there is no availability (unlike the nil rate band) to transfer the unused APR or BPR to the surviving spouse.
2. Consider division of assets between individuals and perhaps holding joint assets as tenants in common as each will have potentially the availability of APR and BPR on the first £1m at the 100% rate.
3. Where it is appropriate consider making disposals to your successor or into a family trust and starting the seven year clock ticking.
4. Consider life assurance written into trust to pay the IHT liability
5. Communicate, Communicate, Communicate – speak to your suite of advisors (lawyer, accountant, land agent) – we are here to advise and assist to mitigate the potential inheritance tax liability and ensure the survival of the farming business into the next generation

Philip continued: “There is no doubt that these changes to Agricultural Property Relief and Business Property Relief will have a detrimental affect on many farms. The key will be to plan and take the right advice now.”

Clarke Willmott is a national law firm with offices in Birmingham, Bristol, Cardiff, London, Manchester, Southampton and Taunton and is this year celebrating its 135th anniversary.

For more information visit Agricultural Solicitors – Agricultural Law – Clarke Willmott