Inheritance tax fears prompt sales of farmland

Expected changes to inheritance tax treatment in the autumn budget on 30 October have already started to encourage some landowners to put their land up for sale, Farmers Weekly data suggest.

Our regular land tracker measures the number of acres advertised in the magazine each month.

While it is tracking at roughly 1% down on the year, with about 75,000 acres advertised so far,  more than 6,000 acres were advertised in the past week alone, a 28% leap from the same week last year.

See also: Bare land block numbers stay high for second year

Industry observers say changes to Agricultural Property Relief (APR) on inheritance tax for farm businesses could be on the way.

Gavin Jones, chartered financial planner at accountant Old Mill, said: “This could include reducing the rate of relief or introducing a lifetime limit to cap the value of the relief.”

He said changes to the interaction of business or agricultural relief with capital gains tax were always possible.

Land sales

Meanwhile, land agent GSC Grays has listed twice as much land for sale so far in 2024 than in the same period last year.

John Coleman, head of land and farm sales at GSC Grays, suggested that a combination of inheritance tax concerns and debt reduction had already meant a significant amount of land had come to the market this year.

He said: “Capital taxes impact farms and farmland, with inheritance tax the most influential. We’ve anticipated changes for years, and it seems likely now.

“Active farming and business management are expected to be key criteria, meaning those who bought farms for inheritance tax reasons may need to reassess how they run them.

“The biggest impact might be on the tenanted sector, especially for post-1995 agricultural agreements. If APR is lost or amended, it could discourage landowners from offering land to the tenanted market.”

Debt reduction

High interest rates, reduced income from direct payments and large debts on farm may also be driving an increase in the number of smaller blocks of land coming to the market, as businesses look to restructure.

Mr Coleman said: “As the land market continues to evolve, we’re seeing a shift in priorities. Debt reduction, taxation concerns and changes in agricultural policies are all influencing decisions.

“However, with the rise of natural capital and growing interest in environmental credits, there are new opportunities for landowners to adapt and thrive in this changing landscape.”