Defiant: Toby, right, and William Findlay on the move
All the stories I heard during the farmers’ march last week were disturbing. They were all desperate to protect their livelihoods and pass their farms – the backbone of this country – to the next generation. With estates worth more than £1m no longer exempt from inheritance tax (IHT), some say this will be impossible.
Chancellor Rachel Reeves’ ill-considered raid means anyone who inherits a farm worth more than £1m could face a 20 per cent tax on anything over the sum from April 2026 (although it remains being half the 40 percent rate paid for other properties). The National Farmers Union fears that 75 per cent of the more than 209,000 British farms in Britain could be affected.
Many people I spoke to say they will have to sell, destroying family farms that date back generations.
But is there any financial solution? We asked tax experts Mark Levitt, partner at tax, accounting and business advisory firm Blick Rothenberg, and Sam Dewes, partner at HW Fisher.
WILLIAM FINDLAY He celebrated his 40th birthday not with a party, but with a six-hour drive from the family farm near Falkirk, Stirlingshire, to London.
He is fighting for the survival of tracts like the 130-acre Strathavon Farm, owned by his 76-year-old father Thomas.
He says: ‘Dad doesn’t stop. We keep a herd of 100 cattle – Limousin and Simmental – and farms like ours should be treated as cornerstones that feed a nation rather than easy fiscal targets.’
Farmland in the Lothians costs around £13,000 an acre, says estate agent Strutt & Parker. Strathavon Farm, with its land, farm and outbuildings, is worth more than £2 million.
EXPERT VIEW: There is a possible tax relief, the Conditional Exemption Tax Incentive, if a property is of historical or architectural interest, has land of exceptional natural beauty or of special scientific interest, or houses objects of historical or artistic interest. This eliminates IHT and capital gains tax on these estates.
Levitt says: “If you find ancient burial mounds or remains of a castle, you might satisfy the relief.”
But you must set up a wealth maintenance fund of £10,000 or more, managed by a professional administrator. You may also have to let the public in at least once a year.
Dewes says another option is to take out a life insurance policy and place it in a trust. Families still pay IHT on your death, but a whole life insurance policy can pay a lump sum on death that is left out of your estate if held in trust, and can pay any IHT bills.
The option is not cheap and would cost farmers like Thomas thousands of pounds a month. However, a 50-year-old could pay £1,250 a month for a sum of £1.4 million held in trust.
You can also put your farm in trust, bequeathing the property to your next of kin in the event of your death. Levitt says: ‘Establishing such a trust can cost between £2,000 and £5,000, but you have to pay 3 per cent of the value of the estate every ten years.
“Therefore, a trust holding a farm valued at £10 million, assuming this is still its value after the first ten years, would have to pay an IHT charge of £300,000, which equates to £30,000 set aside each year “.
ANNABEL WHITBY34, is a fourth-generation sheep farmer in Warwickshire, with a herd of 450 North Country mules on the 300-acre Brookfields farm, owned by his father Mike Green, 72. He couldn’t attend the protest due to hip replacement surgery, but he was able to. You still can’t keep him away from your tractor.
Annabel has two sisters and hoped to one day take over the farm for her sons George, four, and Charlie, six months. But this dream has been destroyed by the Labor Party. Annabel says, ‘How am I supposed to buy out my sisters? What we earn is reinvested in the farm.
I run a dog grooming salon to earn extra money. “This tax bill will shut down our farm.”
According to figures from estate agent Knight Frank, an acre of grass in Warwickshire was worth £7,920 two years ago, meaning the land could be worth £2.4 million. Including a farmhouse and outbuildings, the total value of Brookfields Farm is more than £3 million.
EXPERT VIEW: Farmers should consider succession planning, including gifting part of the farm now to the next generation.
Levitt says: ‘You must live seven years after handing over the farm to avoid IHT. And if you still live in the cottage, there could be complications due to a ‘benefit reserve’ gift rule – continuing to enjoy the property during your lifetime. This could be subject to tax.
“But if those who are going to inherit already share the property, you may be fine.” Dewes suggests that residents pay rent to the new owner who bequeathed the property to avoid tax difficulties.
Speaking: farmers’ banner at the protest outside Parliament
LUCAS MAY36, and Caroline Howells, 35, have 8,000 free-range poultry on their Dorset farm. They brought their two-year-old son Rubén to the demonstration.
Luke is a fifth-generation farmer on the 125-acre Friar Waddon House farm, which is also used to grow hay and raise cattle and sheep. He says: “Our land was valued at £1.5m 15 years ago, so this tax could drive the next generation out of the business.”
He adds: “The only people who are going to make money from this new vindictive tax are the real estate developers who will take over the land that farmers are forced to sell.”
EXPERT VIEW: Dewes says increasing the number of farm owners can increase the IHT threshold, which for this couple could mean getting married. It says: ‘A married couple who jointly own a farm can split it in two, making them eligible for £2 million farm property relief.
This is in addition to the £1 million limit on inheritance tax that all married couples face if they leave an estate to a direct descendant. It means you could be capped at £3m before paying any tax.’
Levitt says farmers like Luke should make the most of the Agricultural Property Relief (APR) capped at £1 million. For Luke, this includes land used for grazing animals and chickens, as well as farm and farm buildings.
Levitt says Business Property Relief (BPR) can be used for machinery and any agricultural workshops.
You can combine Agricultural Property Relief (APR) with Business Property Relief (BPR) up to the individual limit of £1 million.
The Government says farmers will have ten years to pay IHT. Other farms are only six months old.
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