“Communication, compromise and common sense” are crucial for families seeking to safeguard the future of their rural businesses ahead of government cuts to inheritance tax relief.
That was a key message from rural agency Savills and law firm Mills and Reeve during a rural seminar at the Jockey Club in Newmarket.
The government’s controversial decision to scrap inheritance tax relief for farms valued over £1m has left countless farming families vulnerable to crippling tax bills when handing land and assets down to the next generation.
The planned changes to agricultural and business property relief (APR and BPR) are due to take effect from April 2026.
Michael Horton, who is based in the Savills’ Ipswich office and specialises in tax and generational planning, said: “To date, the government is maintaining its position on these changes and it’s important steps are taken now towards planning for future liabilities.
“For the last seven months or so the telephone has been very busy, and estate and tax planning has been at the top of the agenda.
“We are seeing several clients a week to discuss this very topical issue which is often prompting a wider discussion around how the farming business is structured and how succession plans are implemented.
“There’s a definite need for communication, compromise and common sense as families agree how to structure their future ownership.”
Solicitors from Mills and Reeve outlined key considerations for individuals and businesses, including personal allowances and setting up trusts and gifting.
Lauren Parker, a partner in the private client team at Mills and Reeve who is based in the firm’s Norwich office, said: “Conversations need to be had sooner rather than later as there is a window of opportunity to undertake succession planning with the benefit of 100% relief before April 6, 2026.
“Family-owned businesses should set aside time to carry out a methodical review to ascertain the potential inheritance tax liability that would arise on the death of a business owner, and the impact this could have on the business’ viability.
“What assets does the business own? Have APR and BPR been maximised? Is it affordable for assets to be transferred to the next generation? Are there ‘non-core’ assets that could be sold to fund an inheritance tax liability? Should life insurance cover be increased?
“It’s also important to establish any liabilities and assess how much debt the business is carrying as this could be offset against the overall value.”
