The Impact of the Autumn Budget on the Family Farm
At P.A. Duffy & Co Solicitors we understand that agricultural property relief (APR) and business property relief (BPR) have been essential tools utilised by farmers and landowners across Northern Ireland and the wider UK over the years to diminish the risk of Inheritance Tax (IHT) on death. This ensured that the family farm could pass on to the next generation without the anxiety of having to sell land or other assets to pay a substantial IHT bill.
The Autumn Budget announced on 30th October 2024 saw enormous changes to the agricultural and business sector in relation to the reliefs available when a farm and/or business owner dies.
What has changed?
Previously, farmers and business owners could avail of a 100% or 50% relief for qualifying agricultural and business property which significantly decreased and, in most cases, eliminated the IHT which would otherwise be payable on agricultural and business assets.
However, the Autumn Budget announced significant reductions to these reliefs which have been relied on by farmers across the UK.
It was announced that, from 6th April 2026, only the first £1 million of combined agricultural and business assets would attract the full 100% relief from IHT. The value of assets above this amount will then avail of 50% relief from IHT payable and the residue will be taxed at a rate of 20%.
These reliefs are on top of all nil-rate bands and spousal exemptions which are also used to calculate and mitigate IHT.
The Impact of the Autumn Budget on Farmers in Northern Ireland
The Department of Agriculture, Environment and Rural Affairs have determined that approximately ‘half of family farms in Northern Ireland’ which accounts for ‘80% of land that is farmed’ is likely to be impacted by the changes made to APR and BPR in the Autumn Budget.
DAERA’s findings as reported by the Ulster Farmers Union have further illustrated that these larger farm businesses, which comprise of less than half of all farms in Northern Ireland, “account for 80% of the country’s total farmland, 90% of dairy cows, 80% of total cattle, 70% of beef cows and 70% of sheep with many farm families now facing significant inheritance tax bills.”
As A Farmer, What Can I Do To Protect My Assets?
There are various mechanisms available for farm owners and landowners to minimise the amount of IHT payable on their estate on death to ensure that the family farm passes to the next generation.
At P.A. Duffy & Co Solicitors we have an expert estate planning team who can guide and assist you through the following steps:
1. Calculate what your Estate is worth – it is important that you are aware of the value of your entire estate. This is the first step to effective estate planning.
2. Evaluate Your Assets – You will need to determine which agricultural and business assets qualify for the reliefs available to assess your potential IHT liability exposure.
3. Think about the future – EARLY estate planning is crucial. Many farmers will now have to look at the options available to them which includes potentially transferring ownership of the farm business and/or lands, and gifting agricultural assets. It is also important to have a Will in place to protect your retained assets on death.
4. Have a ‘Plan B’ – the person appointed to deal with your estate on death may have to sell land or other important assets to cover the IHT bill where the above steps haven’t been taken. It is particularly important in circumstances where farmers are unwilling to part with ownership of the business and farmlands to ensure that there are sufficient liquidated assets (i.e. money) available to help pay the IHT bill. This can be done through savings accounts, life insurance policies, stocks and shares and other investments.
How Can We Help?
At P.A. Duffy & Co. we understand the emotional, practical and financial complexities involved in estate planning as a farmer and landowner; particularly in light of the new changes to the IHT reliefs available. Our expert estate planning team are here to help you through every step of the way and act in your best interests.