{"id":506688,"date":"2025-10-17T11:39:16","date_gmt":"2025-10-17T11:39:16","guid":{"rendered":"https:\/\/www.europesays.com\/uk\/506688\/"},"modified":"2025-10-17T11:39:16","modified_gmt":"2025-10-17T11:39:16","slug":"britains-farmers-face-grim-new-inheritance-tax-reality","status":"publish","type":"post","link":"https:\/\/www.europesays.com\/uk\/506688\/","title":{"rendered":"Britain\u2019s farmers face grim new inheritance tax reality"},"content":{"rendered":"

\"Campaigners
\n Campaigners have begun rallying under slogans such as \u2018Back British Farming \u2013 Scrap the Family Farm Tax,\u2019 protesting against the government\u2019s decision to curtail inheritance tax relief on agricultural land \/\/ Image: Shutterstock, Mark Anthony Ray<\/p>\n

The British are good at gallows humour. Which explains the somewhat wry suggestions in legal circles recently that, following the government\u2019s decision to upend the longstanding relief on inheritance tax (IHT) on agricultural land<\/a>, the best thing for elderly owners of farming estates to do is to marry their daughter-inlaw or son-in-law \u2013 \u2018so long as the right pre- and post-nup are in place\u2019, of course. <\/p>\n

An even more extreme \u2013 and equally unserious \u2013 suggestion for tax mitigation<\/a> is, ahem, to take the precaution of dying before 6 April 2026. In that case, one\u2019s whole estate would still get passed on tax-free. \u2018We do give clients that option,\u2019 chirps one lawyer, a bit too cheerfully.<\/p>\n

Unfortunately, the jokes might also serve as a grim reminder that the suicide rate for farmers was already among the highest in Britain, even before Rachel Reeves announced her reform<\/a> of agricultural protection relief (APR) and business protection relief at the Budget in 2024. The upshot is that from next April landowners will face a 20 per cent IHT bill on all agricultural land<\/a> over the value of \u00a31 million. <\/p>\n

Down at the Hampshire office of legal firm Moore Barlow, they\u2019re using a notional case study to illustrate the challenge for landowning clients. A 600-acre \u2018vanilla Hampshire farm\u2019 valued at \u00a39.5 million is owned by a Bob and Belinda, both in their nineties, and makes an annual profit of \u00a315,000-\u00a345,000. If Bob were to die before April and pass the estate to Belinda, who then died after April \u2013 once the new IHT regime is in place \u2013 then their son Billy would face a \u00a31.44 million tax bill<\/a>. That this can be spread over ten annual payments (a snip at \u00a3144,000 a year) highlights the issue \u2013 there\u2019s no way on God\u2019s green earth, even if the soil is incredibly productive, that their notional farm can support that. <\/p>\n

\u2018Farms like this will end up having to be sold or partitioned to pay off the tax bill,\u2019 warns Sarah Jordan, a landed estate partner at the firm. She notes that much of the land released to market will go for housing or renewables and adds: \u2018The bigger picture is that this affects our food production and our food security.\u2019 <\/p>\n

See also: Britain at risk of losing its wealthy elite as confidence in regime collapses<\/a><\/strong><\/p>\n

\"RachelRachel Reeves has been urged to consider alternatives to the family farm tax, amid concerns that the reforms could force sales of smaller estates and disrupt British food production \/\/ Image: Shutterstock, Fred Duval<\/p>\n

The problem is especially acute for small and medium-sized agricultural estates where there are elderly owners \u2013 regarded as anyone over 70 \u2013 or those in poor health, because they won\u2019t necessarily be able to take advantage of the seven-year rule on tax-free gifting to pass their land on. <\/p>\n

See also: the best accountants and tax advisers in 2025<\/a><\/strong><\/p>\n

Content from our partners<\/p>\n

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But even for those who are confident they\u2019ve got the years left on the clock, gifting is not necessarily going to work, says Sabrina Sears from the private wealth and tax team at Mishcon de Reya. What if your child is going through a divorce or is simply not yet ready to inherit the land? Therefore landowners are exploring options such as life insurance \u2013 to provide the liquidity to pay the IHT bill when the time comes \u2013 or passing land on to the next generation in trust now. This doesn\u2019t avoid IHT but offers\u00a0control and can allow heirs to spread the IHT charge over 70 years (reducing the liability to a more manageable 0.3 per cent a year). Even so, this will drive many out of the sector. Some say it\u2019s already happening \u2013 rural estate experts at\u00a0Stoneacre\u00a0Advisors say they are observing \u2018an increase in farmland supply as smaller landowners bring forward their retirement plans\u2019.\u00a0\u00a0<\/p>\n

Idina Glyn, a partner specialising in landed estates at Mishcon, says she handled six transactions the day before the last Budget in anticipation of changes, as \u2018empire-building\u2019 estates sought to use the tax changes as an opportunity to snap up increasingly unviable smaller holdings. <\/p>\n

While Glyn believes the tax changes will lead to \u2018short-term and ongoing pain as smaller businesses are forced out of the market\u2019, she remains \u2018cautiously positive about the benefits of large landowners and the opportunity [they] could bring in increased professionalisation\u2019 to the sector, as well as investment. \u2018But that needs to be balanced against the drawbacks of losing the benefits of small, local farms and allowing people to come in,\u2019 she adds. <\/p>\n

What\u2019s clear is that landowners across the length and breadth of the country are rushing to have their estates valued \u2013 to accurately calculate their tax liabilities \u2013 and are consulting solicitors over wills and the restructuring of agricultural assets. All this is being done with a hard deadline looming on 6 April 2026. <\/p>\n

Despite the tax changes, agricultural land remains an attractive asset, especially in comparison with assets that don\u2019t attract any reliefs, says Marcus Maxwell of Farrer & Co. \u2018The value that clients find in agricultural land will still be there,\u2019 he says. \u2018It just won\u2019t be quite as attractive as it was before.\u2019 What\u2019s more, as one agent told me, all the angry placard-waving over reform of APR has served to increase awareness of agricultural land \u2018because lots of people didn\u2019t even know that the reliefs existed\u2019. That\u2019s small comfort to those being pushed out, but is proof positive that farmland has a future. <\/p>\n","protected":false},"excerpt":{"rendered":"Campaigners have begun rallying under slogans such as \u2018Back British Farming \u2013 Scrap the Family Farm Tax,\u2019 protesting…\n","protected":false},"author":2,"featured_media":506689,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[5018,3,4],"tags":[748,393,4884,3303,1144,712,1200,16,10051,15,1764,17917],"class_list":{"0":"post-506688","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-britain","8":"category-uk","9":"category-united-kingdom","10":"tag-britain","11":"tag-england","12":"tag-great-britain","13":"tag-inheritance","14":"tag-northern-ireland","15":"tag-scotland","16":"tag-tax","17":"tag-uk","18":"tag-uk-economy","19":"tag-united-kingdom","20":"tag-wales","21":"tag-wealth-management"},"share_on_mastodon":{"url":"https:\/\/pubeurope.com\/@uk\/115389318301781654","error":""},"_links":{"self":[{"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/posts\/506688","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/comments?post=506688"}],"version-history":[{"count":0,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/posts\/506688\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/media\/506689"}],"wp:attachment":[{"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/media?parent=506688"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/categories?post=506688"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/tags?post=506688"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}