Farmers have benefited from Agricultural Property Relief and Business Property Relief on qualifying agricultural and business assets for several decades, however the budget has overhauled this position by limiting 100% relief to the first £1 million of combined business and agricultural property assets. Values over the £1 million threshold will attract only 50% relief, potentially giving an effective inheritance tax rate of 20%, to assets over £1 million. The unrelieved value falls into the inheritance tax calculation, from which there are further allowances. However, with the inheritance tax personal allowance threshold remaining static at £325,000 until 2030, a level which hasn’t changed since 2009, more individuals will be impacted by inheritance tax on their assets.
The change is due to take effect in 2026 and the technical detail is all yet to come.
A further blow for those who have pension savings, is that pension pots will also be brought into the inheritance tax calculation with effect from April 2027.
A positive is that land farmed under environmental schemes will be eligible for Agricultural Property Relief (from April 2025).
Business Asset Disposal Relief from Capital Gains Tax on the first £1 million of business assets will remain at 10% until April rising thereafter to 14%, and 18% in 2026.
For most family farms this will give rise to the need to carefully plan ahead to mitigate potential tax liabilities, by reviewing how assets are held, reviewing the partnership agreement and taking professional advice. Bagshaws’ chartered surveyors have a wealth of knowledge and experience in this area combined with a practical approach to help you fully understand your position and navigate these next steps.
Contact:
Christine.baggott@bagshaws.com
Ed.lawley@bagshaws.com
Philip.Hulland@bagshaws.com
Malcolm.gale@bagshaws.com
