Farmers on the brink as speculation increases on further Inheritance Tax reforms

By Heather Bright, Partner and ARA specialist

Family farms across the UK are attempting to manage the current Inheritance Tax (IHT) reform plans, but there is growing concern that more reform is coming ahead of this year’s Autumn Budget.

Any further IHT reforms could be catastrophic for farmers who are already having to deal with changes to the Agricultural Property Relief (APR) and Business Property Relief (BPR).

This has already sparked fear for farmers who are worried about the prospect of losing their farms, as well as rethinking their future plans.

What will be introduced from April 2026?

As noted above, changes to the APR and BPR will take effect from April 2026. Under the new regulations, only the first £1 million of qualifying property for an individual will benefit from APR or BPR.

Any farm values above that will only receive 50 per cent relief. In addition to this, the IHT nil-rate band will remain frozen at £325,000 until at least 2030, increasing the likelihood of more farmers becoming liable for IHT.

These measures are already having a detrimental effect not only on farmers themselves but the agricultural sector, with many reluctant to invest and trying to mitigate the risks of an IHT bill, like selling assets and exploring trusts.

The IHT reform also means farmers have to seriously think about their succession and estate planning. Passing the farm down to the next generation may come with unwanted tax implications and this will mean reorganising their initial estate plans.

Nothing is set in stone but planning ahead is essential

We won’t know the Chancellor’s exact plans until she delivers the Autumn Budget on 26 November and speculation about tax rates will continue to intensify.

However, that doesn’t stop farmers from planning especially for IHT changes that we know will take effect in the very near future.

With the APR and BPR extensively changing and unused pensions to be classed as part of an individual’s estate from 2027, you can start putting measures in place to combat the risks of IHT.

If you are concerned about IHT, we are here to support you. We can discuss your plans with you, advise on the best steps and help you every step of the way to ensure you are happy and confident.

It is essential that you put measures in place to protect your farm and more importantly, your family if you intend to pass the business down to the next generation.

For all IHT and estate planning concerns, get in touch with us.