Farmers need to act now to get the right succession planning advice in place for their families

Although the government’s forthcoming Spring Statement may yet see amendments to the way the proposed inheritance tax changes are introduced, it is unlikely that it will abolish the taxation regime completely. And that means that farmers need to act now to get the right succession planning advice in place for their families.

It is, of course, possible that the government may announce some changes, but if they think they can plug a big hole in the economy, and make more money from death taxes, then they're going to do so in some shape or form. This may involve phasing in some of the regulations, which, although may buy farmers some time, does not mean they should delay succession planning with agricultural accountants, solicitors and financial advisers.

For many farmers, succession planning can become complex, especially when they have non farming children or no children. We often see heads of farming families not wanting to change anything, and so it becomes quite difficult for the whole family to have that conversation. It is clear the upcoming changes to inheritance tax rules are causing unrest and worry for many.

Now is the time to start talking about restructuring to help understand the options they have as a family for succession planning. I know, from experience, that many don't like getting involved in things that they're not sure of; especially if the benefits are not made clear to them. There has also been a lot of noise, a lot of recommendations and responses written in the press, there is no wonder the farming community are taking the responsive action, which is to stand up to the government in the first instance whilst remaining a little in doubt of making succession plans.

I work closely with a land management Director who advises around 120 farming families. Those farmers are now asking her what they can do, and how they can plan. They are seeking and wanting the right advice on how to secure their farm for future generations. Many are not cash rich and understandably do not want to ‘sell off their land’ unnecessarily to fund death duties.

I have a recent example of an agricultural client, who we will call Richard, and taking the post April 2026 £1million threshold into consideration.

Richard told me his father had farmed the land for many, many years and that he was lucky that his father had passed the whole farm to him. Now, Richard’s sons do all the dairy farming for him. But Richard still owns the farm, and it is all held in his name. Although he has £1million of allowance, the farm is worth nearly five million. So, immediately, his sons will have an inheritance tax bill of around £800,000 to pay, albeit payable over ten years, but this could well be avoided.

The good news is that Richard can lessen the tax bill through changing his business structure and drawing up a will and more importantly referring to pre and post April 2026 reliefs.

This one example is not isolation and is magnified across the UK. In reality, many farming families will find themselves in the same position. The key is to get these million-pound allowances set up for each person, restructuring partnerships or limited companies.

The maximum combined ‘personal’ inheritance tax nil rate band and RNRB for both spouses or civil partners is an additional £1million or £500,000 as an individual. However, the residence must be worth at least £350,000 for the full RNRB to be available. Currently the tax-free allowance for residences is £175,000 per person, but if the asset is seen as agricultural property rather than the farmer’s own personal relief, these allowances cannot be used against the farm.

To simplify the process, families or individuals need to put the foundations in place which everything else can be built, including structures and wills: You can't talk about trust planning. and real inheritance tax planning until you know what you're putting in your will and what your business structure will look like.

Taking that initial step and taking advice is going to be important. Farmers need three key people in their lives: a good agricultural accountant, a solicitor who understands succession planning in Agriculture, to set up the wills and trusts, and a financial planner, who has the knowledge and experience and can advise and recommend from both a business and a personal perspective. For example, from 2027, pensions are going to start hitting people's estates and it’s only a qualified Financial Adviser who can provide the advice around this.

Have you started your succession plan, because if you haven’t, it’s not really succession, or planning. You will be leaving the harsh reality of tax on your land and farm in the Governments hands, take the time and opportunity to understand your position and complete a business, personal asset and succession review.

So, keep rallying, but alongside the rallying, get some sound financial and generational planning advice.