Law expert urges farmers to avoid rash decisions after 'wave of panic'

 Head of agriculture and estates and partner at HCR Law, Denise Wilkinson, said the changes made during the Autumn Budget sent a 'wave of panic' across the farming community potentially forcing farmers into making rash decisions.

“As it stands, we still don’t have the guidance that we need to make all the decisions with regards to succession planning,” she said. “And when it comes to succession and rethinking business structure, you shouldn’t make changes overnight.”

She advised farmers to sit down with their solicitors and accountants in the early part of 2025.

“There may be some things which can be done now and initiating these discussions is key,” she explained.

Mrs Wilkinson said some families may already have a plan in place that could be revisited and potentially implemented. 

If not, they should assess which assets currently qualify for inheritance tax relief. 

“It's also worth considering discussions about involving younger family members in the business or addressing asset planning with older relatives,” she said.

“If health permits, exploring life assurance to offset tax liabilities could also be a valuable step."

She said the past year has been challenging for farming families, and 2025 is unlikely to bring much relief. 

"The phase-out of BPS, coupled with uncertainty surrounding habitat-based farming support schemes like SFI (or SFS in Wales) — particularly regarding budgets, tax implications, and required capital investment and infrastructure — has increased financial pressure on farming businesses," added Mrs Wilkinson.

For farmers looking to diversify into additional income streams, Mrs Wilkinson highlights concern about proposed changes to Agricultural Property Relief (APR) and Business Property Relief (BPR), which could undermine the viability of such ventures.

"The suggestion that assets may be devalued due to reduced reliefs raises questions about funding, and the banks’ stance on these changes remains unclear," she said.

However, she explained that this is not a one-size-fits-all approach, and seeking legal advice to understand how the changes might affect your business model is crucial.

“Every farm is different, whether that’s the size, the family dynamic or the structure, so what works for one farm might not work for another,” she added. 

“Talking to your solicitor and professional team is essential for making informed decisions around estate planning.”

Mrs Wilkinson said there are other potential challenges for farmers to be aware of in 2025.

“We’re awaiting technical guidance on the proposed changes and that will include how it will impact on existing trusts, so structures already in place to protect farm assets,” she said.

“There are also talks of a comprehensive review of stamp duty land tax which, if increased, could make buying land more expensive.”

Mrs Wilkinson concluded: "Hopefully, 2025 will provide greater clarity enabling farmers to plan effectively for their future, their family’s future, and the future of their farm.

“It is though undoubtedly the case that 2025 will bring plenty of challenges for the farming community, whether that is by way of tax issues, government support and increasing costs.”