How inheritance tax changes will hit farming familiespublished at 18:22 British Summer Time 7 August
Olivia Midgley
Editorial director, Farmers Guardian
For
generations, agricultural estates were exempt from inheritance tax, allowing
family farms to pass seamlessly from parent to child. Now, farmers will have to
pay a 20% levy on bequeathed assets more than £1m, starting in April 2026.
Most working farms are worth well
over £1 million due to land values and assets such as machinery, buildings and
livestock. But the government mistakenly seems to think that assets equal
wealth.
Image source, EPAA typical family farm in the UK might be worth £2m to £3m on paper, but it would generate relatively modest annual profits – with many generating as little as 1%.
When the farm owner dies, their children suddenly face a tax bill of hundreds of thousands of pounds – money they simply don’t have in cash.
To pay the tax, families may be forced to sell portions of their land or the entire farm. While for many businesses it has been a wake-up call to look at succession planning for their businesses, those in their 70s and 80s are left with little time to plan.
The mental health strain on families has been widely reported and lobby groups – including the National Farmers’ Union and others – continue to call on the government to make some concessions to protect elderly farmers before April.
This would protect some of the most vulnerable people but would save Sir Keir Starmer’s government the embarrassment of another full policy U-turn.