Shropshire Farming Talk: What action can be taken to protect family farms for the future?
Deborah Beal, a partner in the wills, probate and lifetime planning team at FBC Manby Bowdler, said the farming sector in Shropshire is facing one of its biggest challenges in decades following the government's recent changes to inheritance tax rules.
From April 2026, while the first £1 million of combined business and agricultural assets will remain exempt from inheritance tax, assets above this threshold will only receive 50 per cent relief, resulting in an effective tax rate of 20 per cent.
This represents a fundamental shift from the current system where Agricultural Property Relief (APR) allows qualifying farms to be passed down the generations tax-free.
To protect your family farm for the future, there are several crucial steps to consider.
Start by conducting a comprehensive review of your farm's assets and structure. This might involve reorganising how assets are held or considering splitting certain elements of the business to maximise available reliefs.
You could also look into lifetime gifting strategies. Making gifts during your lifetime can help reduce the eventual inheritance tax burden, but careful timing is crucial as these need to be made seven years before death to be fully exempt and these should be planned carefully to ensure they are effective.
Consider setting up a family partnership or trading company. This can provide additional flexibility in managing the succession process and potentially access other tax reliefs.
Most importantly, seek specialist legal advice early. The complexity of these new rules, combined with the unique circumstances of each farming business, means professional guidance is essential.
If you would like to know more contact Deborah on 01902 392454 or email deborah.beal@fbcmb.co.uk
