Pension rule changes give farmers an IHT boost

By Heather Bright, Partner and ARA specialist

Farmers have expressed optimism about the changes to the pension system, which they believe will assist in facilitating smoother succession planning for their businesses.

Jeremy Hunt, Chancellor of the Exchequer, introduced several key pension and tax changes in his first Budget, presented in the House of Commons on 15th March.

Among the changes are the abolition of the pension lifetime allowance and an increase in the pension annual allowance from £40,000 to £60,000, effective from April.

The decision to remove the limit on pension accumulations over a lifetime, as it will aid farmers in planning for the succession of their farms. Pensions serve as an independent income source in later years, separate from the farm itself.

This allows farmers to gradually step back from the day-to-day management of the farm and hand over responsibilities to the next generation.

Additionally, pensions are typically exempt from inheritance tax. This makes them a tax-efficient method for farmers to accumulate funds that can be left to non-farming children.

Want to know how the new pension rules affect your succession planning – Get in touch now.