What Changes to Inheritance Tax Could Mean for Farmers

Sean Boucher, Director in the Lifetime Planning team at JCP Solicitors, explains how the Government’s potential changes to inheritance tax could impact farmers.

In October 2024, it was revealed that the Government may have plans to increase the amount of money it raises through tax in the forthcoming Budget: Inheritance Tax for farmers may change, and it is important to understand how this could impact family farms here in Wales. 

Currently, land used for farming benefits from Agricultural Property Relief. This means that relief from Inheritance Tax is available at either 100% or 50% upon transfer of the property, so the next generation of farmers do not have to face steep tax bills when the property and land is passed down.

However, inheritance tax on properties and land which are not used for agricultural purposes face charges when that land, property and possessions are worth more than £325,000. It is thought, according to a report by the BBC, that inheritance tax rules may be changed to reduce the advantages of Agricultural Property Relief. The Government is currently planning the new Budget, which will attempt to mitigate the £40bn shortfall that Westminster claims to have inherited from the previous government.

If this change to inheritance tax for agricultural properties and land were to go ahead, NFU Cymru has expressed deep concern for how this could negatively impact family farms. If farmers have to meet that level of tax demand, it could cause many to have to sell the property just to cover the tax bill. This would break up family farms and would have dire effects on rural Wales, as it could bring into question to viability of small agricultural businesses for young people hoping to enter the industry and take over from their older family members.

There is a fear that such changes could put the future of the agricultural sector in Wales at risk.

As such, we stand with NFU Cymru in calling upon the Government to reconsider any changes to Inheritance Tax for farmers.

For advice and guidance on succession planning, agricultural property and lifetime planning, contact Sean Boucher on 03333 208644 or email hello@jcpsolicitors.co.uk. JCP Solicitors sits on the NFU Panel for Mid and South Wales.