Following yesterday’s announcement from Rachel Reeves, change is coming for the way that agricultural businesses and estates need to plan for the future. This will include lifetime succession planning and Wills. From what we know so far, here’s what you can expect: 

Inheritance Tax 

The Government has announced that it will reform inheritance tax reliefs (Agricultural  Relief and Business  Relief) from 6 April 2026. In addition to existing nil-rate bands and exemptions, the current 100% rates of relief will continue for the first £1m of combined agricultural and business property. The rate of relief over and above that value will be 50%, with assets thereafter taxed at an effective rate of 20%.  

Although this is a daunting prospect and it may seem that the future of farming, particularly family farms, are in further jeopardy in an already unstable market, the government insists that despite the curtailing of AR and BR, it is committed to protecting the capital tax system to ensure the future of food production and environmental schemes. More than ever, it is important to understand fully what the impact will be on your estate, and subsequent tax bills, whether you currently have a plan in place or not.  

Capital Gains Tax 

The lower rate of Capital Gains Tax is scheduled to increase from 10% to 18% with immediate effect (30 October 2024), and the higher rate from 20% to 24%. However, the rates of Capital Gains Tax on residential property will remain at 18% and 24%. 

For farms and estates, this could be problematic, especially in instances where assets need to be sold in order for the business to find additional funds. Planning here is key.  

Business Asset Disposal Relief  

The Business Asset Disposal Relief (BADR) will remain in place. However, the BADR rate will rise to 14% from 6 April 2025 and will match the main lower rate of 18% from 6 April 2026. When planning ahead for succession and retirement, this is going to reduce the available funds for BADR and subsequently, private pension provisions. Business owners should review their current asset plan to avoid being caught out by this change.  

Of course, there are numerous other changes that rural businesses need to be aware of that will have operational impacts on businesses, including SDLT, Employers National Insurance Contributions, and Business Rates to name a few, but planning ahead and re-visiting existing succession plans will help to mitigate against nasty surprises for your farming businesses and estates further down the line. 

Get in touch

Our agricultural and lifetime planning specialists can help answer questions and protect your assets; it is really important to be proactive in addressing these budgetary changes before they come into effect on 6th April 2025.  

Get in touch to arrange a call or a meeting