Autumn Budget: How Proposed Tax Changes Impact Farmers and Estate Planning
3 January, 2025
I am a farmer; my agricultural estate is worth several million pounds. I am very worried about the proposed changes that were announced in the Autumn Budget. How will these affect me and is there any way of mitigating the impact on the tax that my estate will consequently bear?
In the Autumn Budget, the Chancellor announced that full APR (Agricultural Property Relief) from Inheritance Tax (IHT) would cease from April 2026. From that date, full relief would apply up to £1 million and 50% relief thereafter, for both APR and BPR (Business Property Relief) combined.
This news has sparked strong feelings in the farming community. Even without taking farmland or farmhouses into consideration, the £1million cap can be reached – a combine harvester can be worth over £850,000 and tractors approximately £100,000 each.
Another significant point to note is that the £1million cap is not transferable between spouses or civil partners. Therefore, in terms of mitigating tax, there are some planning options available, one of particular significance being to take positive action following the first death to “bank” the allowance.
At this stage, before further details of the proposed changes are confirmed and draft legislation is released, taking significant action is not recommended.
However, you should work with your team of advisors to consider:
- Making sure each spouse’s Will is drafted efficiently to ensure the maximum amount of IHT relief;
- Making use of partnerships where relevant;
- Exploring the use of trusts to potentially shelter some assets, but this needs careful discussion with a qualified practitioner.
More detail is expected imminently, but the advice is to ensure you have booked a meeting with your advisors to take positive action now the New Year is upon us.
Rebecca Robinson
Private Client Department
For further information please email:
Rebecca.Robinson@StorrarCowdry.co.uk
