Gavin Lane
Farmers and rural business owners are being urged to prepare for changes to inheritance tax – due to come into force this spring.
Farm assets worth more than £1m will be subject to 20% inheritance tax from 5 April 2026. It follows the now infamous Budget announcement made by Chancellor Rachel Reeves in October 2024.
Speaking at last month’s Larkin Gowen conference at Fakenham, Country Land and Business Association president Gavin Lane called on farming families to seek advice in a bid to mitigate the impact of the tax.
Large liability
Mr Lane, who farms 200ha at Tittleshall in Norfolk said: “We do need the farming community to be prepared for the changes because, as we stand today, any untimely death after April 2026 could trigger a large tax liability.”
A year-long campaign and scores of protests by farmers have been held in a bid to persuade the government to change its mind on the issue. But so far, said Mr Lane, the Treasury had remained largely unmoved.
“I hope that we, along with those other organisations, have combined to make sure that the Treasury understands the potential economic and social impacts of this incredibly counter-productive taxation change.”
Mr Lane said he believed Defra knew inheritance tax would be hugely damaging. “That does, at least, give us some access to ministers where we can try to find some easy policy wins for them to show that they are serious about growing the rural economy.”
Planning reform
The CLA’s biggest ask is for greater planning reform on farm – an extension of permitted development rights and a relaxation of planning conditions. This would make a huge difference and encourage much needed investment into and onto farms.
“Hopefully, we may gain some ground on this,” Mr Lane told delegates. “My focus has been and will be predominantly on fighting the IHT changes but now pragmatically I am steering my members to take advice in case no change happens.
“Elsewhere, we need to shape the new version of the Sustainable Farming Incentive to make it fit for purpose so those coming out of schemes next December plus those who aren’t currently in a scheme can get in more quickly and easily.”
The government was clear that the Defra budget would remain set at £2.7bn annually until April 2029, said Mr Lane. Given that payments under existing schemes already accounted for £1.8bn, there didn’t appear to be much more cash to go at.
“I am not advocating rushing into schemes, but it is important to be prepared for any new offer which comes up – whether a capital grant scheme or SFI,” said Mr Lane. added. Existing schemes might not be extended again, he added.
Other speakers underlined that inheritance tax was a challenge facing the whole industry – not only in terms of structuring farming businesses but also how any IHT liability could be financed and serviced.
The take-home message from Brown & Co was that change would bring opportunity – but businesses needed to produce detailed budgets, including cashflow, to assess the impact of any decisions and plans for different scenarios.
Conference speakers covered the complex issues involved in succession planning and potential ways to minimise any liability. They also emphasised the need for farming businesses to have a trusted team of advisors.