Agricultural property relief and business property relief reforms

The government has finally published draft legislation for the reforms to agricultural property relief and business property relief as announced in the October 2024 budget.

Unfortunately, despite the lobbying efforts made by those in the agricultural industry such as the NFU and CLA, no changes have been made to the proposed allowances or consideration given to the alternative methods proposed.

As such, from the 6 April 2026 the new measures will come into full force with transitional measures in place from 30 October 2024 to 6 April 2026.

The draft legislation confirms that announced in the budget, the first £1m of qualifying assets will benefit from 100% APR/BPR with the remaining qualifying assets benefiting from 50% relief.

The draft legislation also confirms that the £1m allowance is not transferable to the surviving spouse. It is therefore essential that planning maximises both allowances.

Whilst the £1m allowance takes affect from 6 April 2026, lifetime gifts or settlements made after 30 October 2024 will be subject to the transitional rules.

Where the transferor dies on or after the 6 April 2026 but within 7 years of the gift, the £1m allowance will be factored into the IHT payable on the ‘failed’ gift.

What are the next steps?

1. Obtain the services from experienced professionals who specialise in agriculture. Do you have a Will and partnership agreement in place?  Are they valid and do they meet the needs of the business in terms of succession and maximising tax reliefs? To ensure there is an efficient plan in place, your solicitor, land agent and accountant should all be involved when renewing such agreements.
2. Assess the impact the new legislation will have on your estate. Obtain up to date valuations to determine your current liability.
3. Instruct your accountant to advise on the alternative structures or gifting options to reduce the burden. Having a specialist tax adviser on board allows you to understand not only the inheritance tax implications of reorganising but also possible unforeseen capital gains tax implications.
4. Have you considered a trust structure or family investment company? These structures can be used to pass value out of your estate but allow for an element of control over the assets.
5. Ensure your accounts accurately show that detailed in the partnership agreement or assets held by the business. Using an agricultural specialist ensures that the accounts truly represent that detailed in the partnership agreement and ensures assets obtain  the reliefs they qualify for.
6. Act now – This doesn’t have to mean gifting or restructuring. Acting can just mean ensuring that you understand your position and how the new legislation will impact you.

Black Acre Rural has extensive experience in advising farming families and rural landowners. Please do get in contact for assistance with your inheritance tax planning, succession planning or accountancy needs.

Robert Black
07595662661
rblack@black-acre.co.uk
https://www.black-acre.co.uk/