The proposed changes to inheritance tax (IHT) could lead to an increase in business asset transfers for farmers. These transfers may take the form of gifts to trusts, lifetime gifts, or business restructures aimed at reducing valuations before the new legislation takes effect.

One of the most controversial changes, and the one that has angered many in the agricultural sector, is the introduction of a combined cap of £1 million on 100% relief for Agricultural Property Relief (APR) and Business Property Relief (BPR). There are differing reports on the number of people who will be affected by these changes, with government and industry experts offering vastly different estimates.

Jeff Simpson, a chartered financial planner at Hymans Robertson Personal Wealth, commented that the budget has created a great deal of uncertainty for farmers and landowners.

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“The new limits mean that a significant number of farmers will face inheritance tax on death—up to 70,000, according to the Country Land and Business Association. These changes could threaten the long-term viability of family-run farms, potentially forcing the sale of assets or even the business itself to meet IHT liabilities.”

Mr. Simpson further explained that the disparity between agricultural and market valuations means this new legislation is likely to affect farms with over 100 acres.

He predicts an increase in asset transfers while current IHT reliefs remain in place, but notes this won’t be an option for those who rely solely on their farms for income.

“For those considering establishing trusts to help manage the IHT burden, it’s crucial to plan carefully—especially regarding funding for 10-year changes and managing capital gains tax implications,” he added.

Another key change is the extension of APR from IHT to land managed under environmental agreements with the UK Government, public bodies, local authorities, and approved responsible bodies, which will take effect in April 2025. Mr. Simpson suggested that this could offer an opportunity for farmers looking to participate in biodiversity net gain markets.

“This is a time of significant challenges for farmers and landowners. It is crucial for those affected to seek professional advice and explore different strategies,” he concluded. “Everyone’s situation is unique.”