A new era for farm inheritance: is now the time to act?

Since 1992 there has been unrestricted agricultural property relief (APR) on qualifying agricultural property and unrestricted business property relief (BPR) on qualifying relevant business property for inheritance tax (IHT) purposes.

However, from 5 April 2026 we have entered a new era where this is no longer the case and after much debate and conjecture and as outlined in John Endacott’s article we now find ourselves in a situation where any individual on passing could have an 100% allowance for business and agricultural relief limited to £2.5m per person which is transferable between spouses and civil partners with any remaining qualifying property being granted 50% relief.

The expectation being that c 85% of those claiming APR will not now pay IHT, which is better than it could have been but still leaves some with issues that need addressing.

A question we frequently get is, does this mean that succession as a topic is now off the meeting agenda?

The answer to this has to be a resounding NO!

Whilst IHT has clearly been a driver for many of the conversations we have been having I think it is essential that whilst for many they can breathe easier this might still need some consideration to ensure that the full allowances are utilised.

Furthermore, succession must be seen as a topic far broader than just tax and it is essential that quality conversations regarding succession and the practicalities remain at the heart of our conversations.

Why succession was often delayed in the past

Up to the October 2024 Budget many farmers might have reasonably questioned why they should transfer assets during their lifetime when those same assets would pass tax‑free on death, as they could retain full control in the meantime, however whilst this might still be the conclusion reached today I think the following question needs to be asked. Does it make sense from a practical perspective for the eldest generation hold onto the family silver until death?  It doesn’t seem to the case in many other businesses.

Succession is clearly a very emotive topic and perhaps discussing your own mortality is not top of anyone’s bucket list and the fear of family fall out can be another reason for avoiding the conversation and retaining the status quo.

Other common barriers to dealing with succession issues often include:

• Insufficient retirement provision (housing, pensions, living costs)
• Reluctance to give up income or control
• Family relationship or trust concerns
• Uncertainty over whether generations could work together
• Parents steering children away from farming due to industry pressures
• Structural and tax issues that felt easier to “sort out on death”

However, the biggest obstacle was often emotional as the older generation found it difficult to hand over control while still alive.

However, in most cases once the subject has been broached people invariably feel better with a plan in place and interestingly there is evidence to suggest a strong correlation to profitability and those businesses that have dealt with succession.

There is no one way to deal with succession as everyone’s situation is unique to them but I have always found the following 10 step guide a useful starting point.

Succession planning: a practical 10-step guide

1. Do you need an independent facilitator?

• Can be invaluable
• Who should this be?
• Someone trusted and seen as suitably independent by all

2. Have an initial family conversation

• Neutral venue often helps
• Discuss whether there is interest in planning
• Identify broad goals and expectations
• Where is the business now?
• Try to develop open, transparent, inclusive communication
• Allow everyone to voice an opinion without fear of reprisal and judgement

3. Meet with your accountant (and the family)

• Explain what you want to achieve
• Ensure everyone understands the purpose and direction

4. Agree a sensible process and build your professional team

• Valuation agent
• Bank
• Accountant
• Solicitors
• Independent facilitator?

5. Time frame

• Once a decision is made, act forcefully and put a sensible time frame in place to ensure hat things keep moving forward, it is easy to procrastinate and delay

6. Obtain valuations and review the options

• Talk through plans in more detail
• Consider practical issues
• Decide on the preferred approach

7. Check bank approval

• Ensure the bank is comfortable with increased capital held by the next generation
• Confirm borrowing or security arrangements

8. Ask your accountant to prepare a tax consequences paper

• Understand the IHT, APR/BPR, CGT, SDLT and VAT implications
• Tax is an important consideration but should not be the only consideration

9. Work with the relevant lawyers to implement the plan

• Property lawyers: land transfers, titles, agreements
• Corporate lawyers: partnership agreements, company structure changes
• Family lawyers: pre‑nuptial and post‑nuptial agreements
• Private client lawyers: wills and estate planning

10. Transfer responsibility to the next generation

• Ensure they take on leadership and decision‑making
• Avoid complications by aligning ownership with responsibility

The £5m per couple 100% relief lifetime limit has made many in the farming community relax, but the stress created over the last 18 months will live in the memory.

Having been untouched for over 30 years the assumption that APR or BPR will save the day from an IHT perspective cannot, and will not, ever be taken for granted again and there remains the uncertainty of what will happen at the next Budget.

Timely succession planning has to be the best pathway to take, ensuring that the right things are being done for the right reasons, one of which could well be a tax saving.

We are here to help guide you through whatever approach you wish to take.