Shropshire Farming Talk: Inheritance tax change ‘could force sale of farms’

Currently, Agricultural Property Relief (APR) allows farms to be passed on to the next generation without paying inheritance tax, as long as they remain working farms. 

However, changes announced by the Chancellor today means that from April 2026, whilst the first £1million of combined business and agricultural assets will continue to attract no inheritance tax, assets over £1million will be taxed with a 50 per cent relief, at an effective rate of 20 per cent.

The change comes despite significant lobbying from the farming sector.

This could cause huge financial challenges for families and for some could force the sale of assets.

On paper, it may seem that farms can be valuable but because the assets are tied up in the land, property and machinery needed to operate the business, farming families are often asset-rich but cash-poor.

Changes to the agricultural property relief means many farming families could face huge unexpected bills when they inherit a farm – and that could be cash they don’t have.

The prospect of having to sell a farm that has been in the family for generations will be devastating for farmers everywhere.

Our advice to farming families would be to get expert legal advice on succession planning to make sure you have done everything you can to protect your family’s livelihood.

Even if you have previously put plans in place, it is worth getting them checked again in light of the changes announced in the Budget – an experienced lawyer will be able to spot anything that might cause problems down the line.

I appreciate that the Chancellor has inherited some very difficult financial issues that need to be sorted, but it’s a shame that farming families will feel the brunt at a time when the industry is already facing overwhelming strains. 

by Deborah Beal, a partner in the wills, probate and lifetime planning team at FBC Manby Bowdler