Time for action on estate planning

Since the changes were first announced in October 2024, they have been widely discussed throughout the farming and rural community. At the time, April 2026 felt far enough away to allow families the opportunity to reflect, take advice, and put appropriate tax planning in place.

However, as the saying goes, “time flies” – and with the 6th April deadline now fast approaching, the window to act is narrowing.

For many farming families, this is made more challenging by the fact that inheritance tax planning is rarely straightforward. Decisions often involve not only the business and potential sources of income, but also wider family considerations and long-term succession plans.

This can make it tempting to avoid difficult conversations or put important decisions on hold altogether.

The main change coming into effect on 6th April 2026 is that 100% Business Property Relief (BPR) and Agricultural Property Relief (APR) will be capped at £2.5 million, with only 50% relief available on the combined value above that threshold.

The 100% relief on the first £2.5m will be transferable between spouses. This means that, provided ownership of assets is structured appropriately, a married couple may qualify for up to £5m of assets receiving 100% relief on the second death.

However, many farms are worth considerably more than the new cap being introduced. For those families, the potential inheritance tax exposure could be significant.

The rising value of agricultural land in Northern Ireland has also added to this concerns with recent data showing it had reached a record high, with County Armagh overtaking Dublin as the most expensive on the island of Ireland.

Also from April 2027, pensions will be liable to Inheritance Tax, increasing the overall Inheritance Tax exposure on an estate - yet another reason to put appropriate tax planning in place now.

As a result, some farmers are considering making a gift of business or agricultural assets to a discretionary trust prior to 6th April, which would allow those assets to qualify for 100% inheritance tax relief under the current rules. After that date, a gift of the same assets will also only qualify for 100% relief up to the £2.5mcap.

While there may also be inheritance tax savings where assets are gifted outright to individuals - by reducing the overall value of an estate - this is not always a practical or desirable option. Family circumstances, succession timing, or the need to retain a degree of control can make outright gifting difficult.

In such cases, trusts can offer a degree of flexibility. A discretionary trust can include a broad class of potential beneficiaries, and as trustees, individuals can retain control over the trust assets. Trustees may also have the ability to add beneficiaries in the future.

Importantly, no discretionary beneficiary has an absolute entitlement to the trust assets, allowing the structure to adapt as family circumstances and priorities change over time.

With just weeks remaining until the new rules take effect, now is the time for farming families to review their inheritance tax position, begin or revisit family discussions, and seek expert guidance. Careful planning taken today could make a significant difference in protecting the farm and securing its future for the next generation.