Matthew Yates explores the impact of new IHT reforms on UK farmers in IFA Magazine
Matthew’s article was published in IFA Magazine, 18 December 2024, and can be seen here.
Matthew Yates, Partner and joint head of our Private Client department, explores the UK government plans to impose inheritance tax (IHT) on farmers, capping inheritance tax relief for agricultural assets.
Announced by Chancellor Rachel Reeves in her first Budget, the proposed changes will introduce a combined upper limit of £1 million for Agricultural Property Relief (APR) and Business Property Relief (BPR) from April 2026. This marks a significant shift from the long-standing policy of offering generous IHT reliefs to support the continuity of family farming businesses.
Historically, APR and BPR have played a crucial role in allowing farms to pass from one generation to the next without being burdened by large tax bills. However, under the new rules, any value above the £1 million threshold not passed to a spouse or civil partner will be taxed at an effective rate of 20%, as only 50% of the surplus will qualify for full exemption. While the government will allow IHT to be paid in interest-free instalments over 10 years, this offers limited reassurance to farming families concerned about liquidity and succession planning.
Matthew highlights that these changes could have far-reaching consequences for farmers with estates exceeding the new cap. The reforms may force the sale of assets to meet tax liabilities, potentially disrupting long-standing family operations. As the farming community prepares for the 2026 implementation, he advises early and strategic estate planning to mitigate the impact and ensure that farms can continue to be passed on to future generations.
Read the full article on the IFA Magazine website [external link].