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Independent Financial Advice for Scottish Farmers

Starting from 6th April 2026, Agricultural Property Relief and Business Property Relief are expected to be capped at a combined value of £1 million. Any value exceeding this threshold may be subject to a 20% inheritance tax.

Whilst individuals can also benefit from their individual inheritance tax thresholds—currently a £325,000 nil-rate band and an additional £175,000 for main residences being passed to direct descendants—these thresholds begin to taper for estates valued over £2 million also.

We understand that farmers routinely face a variety of challenges that affect their financial stability, from legislative changes, climate fluctuations, livestock diseases, and modifications to grants and allowances, just to name a few.

According to Government figures from 2022-2023, the average return on capital for farms was a mere 0.5%, highlighting a stark contrast to more profitable business sectors. As such, many farmers worry they will struggle to accumulate enough savings to cover the inheritance tax bill based on land values – values that do not correlate with their actual working profits.

How can farmers tackle the Autumn Budget changes to Business and Agricultural Property Relief?

If these changes go into effect as planned, it is important to note that there are financial planning solutions available to assist farmers in navigating IHT planning. The key is to do so early to explore the right options for you, such as gifting the farm to the next generation, putting it into trust or insuring against the inheritance tax liability.

Our specialists in financial advice for farmers can assist you in planning ahead to mitigate potential tax liabilities ahead of the April 2026 deadline. We can also work alongside your professional network of accountants and solicitors to liaise on plans with your needs at the centre. Please do not hesitate to get in touch with a MacDonald Partnership Independent Financial Adviser on 01463 242 242. 

For more on the proposed changes to Business Property Relief  and Agricultural Property Relief, hear from Nicola Glass and Sophie Haslehurst on the Integrity365 Financial Insights Podcast:

 

Author: Nicola Glass, Independent Financial Adviser, Integrity365

Published: 20th Dec 2024

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