During Mercia’s recent Farming Conference, speakers highlighted key changes to Inheritance Tax (IHT) as being ‘significant in terms of the impact not just on the agricultural sector but in terms of the business sector generally’. In this blog we take a look at what was outlined in the conference.
Changes to IHT
Pat Nown, Technical Lecturer and Consultant at Mercia, highlighted key IHT changes to Business Property Relief (BPR) and Agricultural Property Relief (APR) as being of particular importance. These included the combined claim for relievable property for deaths from 6 April 2026: APR and BPR at the 100% rate will be restricted to a value of £1 million. The allowance is a combined value limit across eligible agricultural and business property.
Additionally, the rate of BPR relief will be reduced from 100% to 50% in all circumstances for shares traded but designated as ‘not listed’ on the markets of recognised stock exchanges, such as AIM. A separate £1 million 100% limit applies to relevant property trusts if they were established before 30 October 2024.
In regard to IHT on unused pension funds, including defined contribution and defined benefit schemes, Nown says that in many defined benefit schemes there isn’t a dedicated fund which can be inherited. However, often specific death benefits apply.
Infrastructure diversification
Antony Pearce, owner of Stoke Farms Ltd, outlines the benefits of farm infrastructure diversification. These include converting underutilised buildings into commercial storage, which could help to generate additional rental income. The conference was told that diversification strengthens the core farm business and that carbon and energy are now monetised assets.
Farming without the public purse
Jeremy Moody, Secretary and Adviser at the CAAV, says that English farmers are now ‘farming as a business’.
He continues: ‘Delinked payments have essentially gone. English farmers are now not beholden to the public or taxpayers for their money.’ Farmers are ‘free to choose how they approach farming’, including letting out buildings; what you’re farming; how you’re farming; where you farm; and when you farm. Moody stated that these are ‘all business choices’.
Prospects for UK agriculture
Richard King, Head of Business Research at the Andersons Centre, provides an overview of the prospects for UK agriculture. King highlights slow productivity growth in the UK as being a ‘long-term problem’; the government using ‘supply side’ reform to unlock growth; ‘shaky’ government finances being impacted by poor growth; and minimal additional cuts in the base rates of interest as being matters of concern to farmers.
Considering succession planning
David Missen, an independent consultant and adviser on tax and agriculture, outlines the key reasons why farmers should plan in advance for succession. Phasing in the younger generation, minimising tax, securing tenancies and bringing in fresh capital or ideas were amongst his key recommendations for early succession planning.
Mercia’s accountancy conferences
Mercia’s one day accounting and tax conferences focus on providing essential information on specialist topics. They aim to help you gain a wider appreciation of the factors affecting your clients through conference panels hosted by industry experts.
Our upcoming programme includes conferences focussing on compliance, charities and the challenges facing managers. Find out more here.