The controversial changes to Agricultural Property Relief (APR) and Business Property Relief (BPR) announced in last year’s autumn budget are getting closer, and are due to be implemented next April.  They include the proposed APR alterations, widely labelled as a ‘Family Farm Tax’, making succession planning for farmers more important than ever before.

Solicitor Lucy Wilton discusses how you can minimise the impact of these changes on your farm and secure your family’s future.

Protecting your family’s future

The changes Rachel Reeves announced last autumn will cap the exemption of farm assets from IHT at £1m.  With the average farm in the UK (excluding the farmhouse and any other buildings) valued in 2024 at £2.4m according to Gov.uk, it is easy to see why this is going to have such a significant impact on farmers.  

It also means that getting your succession plan in place is now more important than ever before. Putting your head in the sand on this one could threaten the very existence of your farm and your family’s future. Lifetime planning could minimize taxation, but can also assist with the smooth succession of important assets to those you intend to carry on your livelihood.

Interestingly, according to a NFU survey conducted last year, 44% of farmers have no succession plan at all in place.

Don’t put it off, the time is now.

In our experience, delaying crucial multi-generational discussions and decisions around this type of matter tends to mean disputes are more likely to occur and opportunities to put in place effective taxation planning are missed.

Tackling difficult issues now rather than sweeping them under the carpet will mean that you can be open and honest, explore and understand different views and make the most of the opportunity to try to align expectations before having to do it under pressure in a crisis situation. We call it the ‘long goodbye’ where family members are forced to unravel affairs at a time where they are also grieving.

Refusing to discuss matters will only be detrimental to those who take on the business in the future as an enforced succession plan under such circumstances is rarely as cost effective or successful as one which is done calmly with everyone’s agreement. Even where decisions cannot currently be made with certainty, there are succession documents available which empower chosen persons to firm up your current thoughts at the time (based on actual taxation, assets and family circumstances at the time of your death), and is a much more desirable plan than none at all – at least you pick who is in charge and roughly what you envisage.

What does succession planning for farmers involve?

As part of the succession planning process we will work with you to ensure business continuity, effective tax planning and the long-term viability of your business and family livelihood.   As well as fundamental elements such as establishing the most efficient business structure for your business e.g. a partnership, discretionary trust or limited company we would also look at getting what you might regard as the more basic things in order; such as checking Wills are up to date and that you have a personal and/or Business Lasting Power of Attorney in place should you become unable to work for any reason, temporarily or permanently.  

A Will covers what happens when you die, not before.

A Will deals with what happens when you die, whereas appointing a Power of Attorney deals with what happens when you are alive but incapacitated, and would ensure that the farm business continues should you fall ill or have an accident. Business LPAs are a separate document to a standard LPA, further detail on this can be found here.

Planning is personal to you, your assets, family and intentions. The same solution does not work for every scenario, so taking bespoke advice is important. Our approach is to ascertain the current position, what this would mean in terms of your estate if you passed away as things are, versus how you would actually prefer to leave your affairs. We would then advise you on what action is required during your lifetime and what should be included in your Will instructions.

Facing tricky scenarios with confidence

We can help you ensure the legal framework is in place to manage many emotionally charged situations such as:

• Handing over the farm to the next generation but still being involved somehow
• Passing on the farm to one of your children without being financially unfair to the other(s)
• Retiring but being sure that you have enough to be comfortable
• Carrying on working but making provision should anything happen to you

Get in touch
If you would like to find out more about succession planning and bring peace of mind to you and your family, our friendly and experienced team would be pleased to hear from you.  You can call us on 01872 241408 or email info@penderlaw.co.uk