The difficult reality of a restricted Agricultural Property Relief
By Heather Bright, Partner and ARA specialist
Actions have consequences and the reality of farmers coming to terms with the upcoming restriction on Agricultural Property relief has been damaging. In the recent months since legislation changes were announced, over 3,000 farms have closed.
According to the Office for National Statistics (ONS), in total 6,365 agricultural, forestry and fishing businesses closed during the past year, the highest number since ONS started collecting data in 2017.
It is alarming and very concerning for farmers particularly if they are considering both the short-term and long-term future of their farm.
The facts behind the numbers
The vast majority of these closures took place during the first half of 2025, shortly after the changes to the Agricultural Property relief and inheritance tax measures were announced by Chancellor Rachel Reeves.
In addition to this, only 3,190 new farming businesses were open in the same yearly period meaning an overall business net loss of over 3,000.
Rachel Reeves’ announcements in the 2024 Autumn Budget would have been a sucker punch for farmers especially given the difficult financial challenges they already face and will face ahead of the legislation coming into effect in April 2026. It is clear the impact on the agricultural sector has been detrimental.
What can farmers do
The reality is farmers will have to think about the future of their farm in the short term and long term.
Given the new legislation is to come in April 2026, there will be more costs including an inheritance tax bill if you decide to pass down your farm to the next generation.
Many farmers will follow this path, and it is important to assess the costs involved and put an effective plan in place to try and ease the financial challenges.
Things you can do include:
- Assessing your Will and making any changes where required
- Place gifted assets into a trust before April 2026
- Life insurance policy covering death on the farm
- Succession and estate planning
It is important to have a plan in mind and speak to experts who can help understand the changes to come, protect your farm and ease financial concerns.
If you’re putting your affairs in order and planning on passing down your farm to the next generation, get in touch with us for advice and support.