“The issue which most farmers have been wrestling with for over a year is the so-called Family Farm Tax whereby a farmer’s estate is valued on death and the IHT payable is then assessed on that value. The debate here is less about the IHT payable when a farmer dies, but more about how the changes are already influencing investment decisions, succession planning, and future viability of farming businesses.

Since April 2026, the first £2.5 million (up from £1 million) of qualifying agricultural and business property can receive 100% IHT relief, and then the IHT will apply at the various rates for any estate worth more than that. Although married couples and civil partners can combine allowances to pass on up to £5m tax-free, there are valid concerns about leaving a substantial tax liability to future generations. The threat not only comes from reforms of inheritance tax reliefs, agricultural property relief and business property relief from April 2026, but also unused pension funds and death benefits in a deceased’s estate becoming liable for inheritance tax from April 2027.

 The issue is that most in the agricultural world are asset rich but cash poor. Many farming enterprises will therefore need to sell the farm in order to pay the IHT on the death of the proprietor farmer. Many will have seen the protests with tractors lining up in Mayfair to share the clear message that that farmers simply cannot afford it. 

 The effects of these changes are already becoming evident. The uncertainty has meant that farmers have been actively devaluing their businesses to reduce the exposure. That means less investment in the production of food, less investment in the upkeep of countryside that we all love to see (those pretty dry-stone walls don’t look after themselves) and less investment in employment of staff for the lost farm shops, clay pigeon shoots and other diversifications which farmers have had to carry out to keep the wolf from the door. We are all the losers in this scenario.

 It will be interesting to see how the Budget deals with the continuing issues arising from this tax and there is hope across the industry that it is simply scrapped or the threshold is raised to a more realistic level.

 Farming families need clarity and a framework that recognises the difference between the paper value of their land and the income it actually produces.”