Advertiser content
Farm business succession: The way ahead amid new tax rules
Provided by
Offering legal advice for life and busines, Shakespeare Martineau’s national agricultural and rural land team can assist on a wide range of legal matters in relation to your land, your business and your family.
As a certified B-Corporation, we are passionate about conservation and are leading advisors for BNG and natural capital projects.
We work with both landowners and tenants and can help with all aspects of buying, selling, occupying and managing rural land and property – helping you maximise the value and potential of your land.
​We know that farming and family matters are often inextricably linked. We specialise in helping farmers, landowners and their families to manage their finances and protect their assets.
Legal and planning advice for:
- Property and land
- Diversification
- Succession planning and private client
- Natural capital and biodiversity net gain
- Renewable energy
- Litigation and disputes
- Partnership agreements and legal structures
Contact us:
Amy Cowdell, Head of Agriculture, amy.cowdell@shma.co.uk
Current legislation provides reliefs to inheritance tax that farmers have been able to rely on to pass their land and businesses down the generations, but this is about to get more challenging.
The October Budget introduced significant changes to agricultural property relief (APR) and business property relief (BPR) for inheritance tax purposes – adding another layer of complexity to farm succession planning.
With further details expected later in the year, landowners are facing uncertainty. However, good succession planning has always equipped families to better protect their assets, mitigate tax exposure and ensure a smooth transition to the next generation.
@ SHMA
Unpacking the new rules
From April 2026, only the first £1 million of an individual’s farm and business assets will qualify for full 100% relief, with assets beyond this threshold eligible for 50% relief. This means they will effectively be taxed at a rate of 20%, with the tax being payable over a 10-year period.
All those with assets falling into these categories now need to consider how this tax bill will be met. This could mean their heirs need to sell parts of the farm or business assets or increase borrowing, whereas others may make use of insurance products on the market to meet tax obligations.
First steps: Understand the value of what you own
Understanding the value of your farm assets and how they are owned is the foundation of any succession plan.
Is your farmland owned by the partnership or held personally? Who legally owns the farm buildings, machinery and stock?
If these issues aren’t clarified, they can create significant complications down the line – not just have tax consequences.
The potential tax liability of your estate will be based on market value. Getting an accurate valuation now can provide a guide to what planning is available to you and help you plan effectively.
Despite the risks, our research found that more than a third (36%) of agricultural business owners have not made a will, and less than a third (32%) have arranged a lasting power of attorney for their business.
As we know that the £1 million allowance will not be transferrable between spouses, having a properly drawn up will that makes use of the first to die’s allowance will be crucial in mitigating any future inheritance tax liability.
Beyond tax: Securing the farm’s future
While tax is forcing the conversation, succession planning has always been – and always should be – about more than just mitigating liabilities; it’s about the future of the business itself.
Many farmers assume the next generation will take over, but is that really the case? Do they want to continue the business? Are they excited by opportunities such as diversification, environmental schemes or renewable energy?
According to our data, 60% of farming parents say their children expect to inherit the business and more than two thirds (67%) have made promises that they will. However, 32% of business owners worry their farm would fail if their children took over.
These conversations can be difficult, but they are essential. A clear plan now reduces the risk of future disputes and ensures a viable path forward, whether that means passing the business down, restructuring or preparing for an alternative future.
Mitigating tax liabilities: What are the options?
There are various strategies to reduce inheritance tax exposure, but each comes with its own risks and considerations.
Lifetime gifting of land or assets can be effective, but only if structured correctly to avoid unintended tax consequences especially if you still need to receive an income from that business.
Business protection insurance can provide a financial buffer, but it must be set up appropriately and for some is just not affordable.
Trusts and corporate restructuring may offer solutions, but professional advice is essential to avoid pitfalls that could lead to higher tax bills or legal complications.
A tailored approach is key – what works for one farming business may not be right for another.
Taking action
Despite the challenges, planning ahead can prevent disputes and safeguard the farm’s legacy.
Encouragingly, 66% of agricultural business owners have started succession planning, but with the new tax landscape emerging, now is the time to revisit these plans.
To help farming families navigate these changes, watch our on-demand webinar tailored for rural landowners and agricultural business owners, covering tax planning opportunities and challenges, succession planning and risk mitigation for disputes, and development options for land and buildings.
To find out more, call 0330 024 0333, email Jennie.Wheildon@shma.co.uk
Jennie Wheildon @ SHMA
Emma Carr @ SHMA
and visit shma.co.uk.