Farmers are being urged to seek expert advice following “disastrous” Government changes to Inheritance Tax announced in the Budget, which are feared will cripple family farms and stop them being handed down to the next generation.

Chancellor Rachel Reeves will severely limit Inheritance Tax (IHT) reliefs from April 2026. The IHT will be levied at an effective rate of 20 per cent on the value of business and agricultural assets over £1 million - including livestock, farmhouses, sheds and machinery - in a controversial shake-up of Agricultural Property Relief (APR).

The move has sparked fury and warnings it will kill off farms that have been in families for generations, as well as risking national food security.

Experts from mfg Solicitors (https://www.mfgsolicitors.com/) said it was now vital farming families sought professional advice regarding succession planning.

Alex Phillips, Partner and Head of the Agriculture and Rural Affairs Division at mfg, said: “Farming families are feeling particularly let down following the Chancellor’s Budget.

“You can feel the mood and despair just by looking at social media, with one farmer claiming that he can no longer afford to die, and the National Farms Union (NFU) President, Tom Bradshaw, scathingly referring to the Budget as disastrous for the future of family farms and a threat to the resilience of our food production.”

Farming families believe the Labour Government has broken pre-election promises after footage emerged of Prime Minister Sir Keir Starmer - then the leader of the Opposition - assuring farmers in 2023 that he understood the existential risk to British farming and the huge implications of losing working farms.

Victoria Vyvyan, President of the Country Land and Business Association (CLA), has referred to the moves as “nothing short of a betrayal” after the Labour party made regular assurances that it would not change IHT reliefs.

Ms Phillips added: “Many have said that these changes could severely hamper a farmer’s ability to pass the family farm onto their children and grandchildren without having to sell a significant part of the land to pay tax. Which for many may not even be possible without risking the viability of the entire farm.

“The Chancellor claims that only 6% of estates will pay IHT this year, but the general consensus amongst agricultural professionals is that in reality all but the smallest of farms will be affected at a time when the industry is looking to the Government for support.

“Farming families will now need to seriously consider their futures to ensure the preservation of their farms, many of which have been in their families for several generations, as well as the general future sustainability of their businesses and the country’s food production.”

Sally Smith, mfg Partner and head of the Tax and Estate Planning Team, said: “We would urge farming families to seek professional advice about their Inheritance Tax and succession planning.

“Given the significant changes to Agricultural Property Relief and Business Property Relief for Inheritance Tax announced in the Autumn Budget, all farming families’ Wills and Partnership Agreements should be reviewed and updated where necessary. 

“Farming families are also likely to want to consider lifetime gifting as part of their succession planning. It is very important they obtain thorough advice from their lawyers, accountants and land agents, preferably all working together.”

If you wish to contact Alex or Sally, please email alexandra.phillips@mfgsolicitors.com or sally.smith@mfgsolicitors.com.

mfg Solicitors has offices in Kidderminster, Worcester, Bromsgrove, Birmingham, Ludlow and Telford.