Inheritance Tax Reform – A Tipping Point for Family Farms?
As Parliament winds down for the summer recess, the question on many farming families’ minds is: will the government be for turning when it comes to proposed tax reforms?
Ministers are remaining silent on the CBI Economics analysis suggesting that the proposed Inheritance Tax (IHT) reforms could cost the UK economy £14.9 billion and 200,000 jobs over the next five years. This is in stark contrast to the government’s own estimate that the Agricultural Property Relief (APR) and Business Property Relief (BPR) changes would raise just £0.5 billion in revenue per year, a figure that now appears dwarfed by the potential economic fallout.
According to expert lawyer Esther Woolford, the current political turbulence and the looming break mean a U-turn on the proposed APR and BPR changes seems unlikely.
Esther, partner and agriculture sector lead at national law firm Clarke Willmott LLP, says now is the time for farming businesses to look ahead and plan for the changes coming in.
“Assuming no reversal and no major revisions in the Autumn Budget, we must prepare for a new reality,” says Esther. “The proposed changes represent a paradigm shift in succession planning for farming families so they must be proactive.
“The old regime allowed for conservative, often last-minute planning. The new rules demand early action and assets must be passed down during the lifetime of the current generation.
“With more farmland on the market than usual, for some this is a threat, while for others, it’s an opportunity as the market shifts.”
Part of the shift in succession planning, according to Esther, is engaging the next generation and for many families there are upsides to this. Younger family members becoming owners earlier can foster a stronger sense of responsibility and long-term thinking.
But succession isn’t a one-off event. The next generation will face the same challenges, so planning must be cyclical and continuous. Business owners need to question whether the farm business is resilient enough to support multiple generations while absorbing new tax burdens.
Esther also champions transparency and openness within families about wealth, intentions, and expectations. She said: “Succession planning requires a delicate balance of open, honest and personal conversations between family members and insightful professional legal advice.
“Several safeguards can be put in place by lawyers, for example at the moment nuptial agreements are back in focus, not just because of recent Supreme Court rulings, but because transferring assets earlier increases exposure to life’s uncertainties, including divorce.
“Holistic planning is also important. Wills, trusts and business structures must be aligned across generations. Many families are also turning to insurance to cover the risk of seven-year gifts. It’s often more affordable than expected and can be structured to spread the cost.
“In short, the proposed IHT reforms are not just a tax tweak, they are an ideological shift in how farming families must think about succession, security, and sustainability. Whether this is a threat, or an opportunity depends on how early and how well families prepare.”
Clarke Willmott is a national law firm with offices in Birmingham, Bristol, Cardiff, London, Manchester, Southampton and Taunton.
For more information about its services for farming families visit Agricultural Solicitors - Agricultural Law - Clarke Willmott
