Inheritance Tax Changes for land owning and farming families – How getting your ducks in a row now will help later!
In the 2024 autumn budget the government announced wide reaching inheritance tax reform affecting Agricultural Property relief (APR) and Business Property Relief (BPR).
The proposed changes mean that from April 2026 inheritance tax relief for farmers and land owning families, with businesses and agricultural assets, would be capped at £1million with a new rate of 20% inheritance tax being charged on the value of the land, property and assets above that. The government have set out proposals that the resulting inheritance tax could be payable in instalments, interest free, over the period of 10 years.
What is the seven year rule for agricultural land?
Under the present inheritance tax rules (APR) may be available on lifetime gifts of land or property occupied for the purposes of agriculture. To qualify, the property or land in question must have been either occupied by the owner solely for the purposes of agriculture for the two years prior to making the gift or, it must have been owned by the person making the gift for at least seven years and occupied by someone else for the purposes of agriculture throughout that period. However, the changes announced in the autumn budget will limit the APR and BPR that can be claimed, capping this to just the first £1million.
What action should I take to limit my inheritance tax liability?
At present, we await the government’s final announcements on the proposals to be implemented. We would, therefore, recommend that in the interim period careful consideration is given to any proposals to transfer property or land. However, there are a number of things that you can be doing to ensure that your paperwork is in order to enable you to take prompt restructuring action, should you wish to do so, when the government announces their final proposals in autumn 2025.
What steps can I take now in readiness for the inheritance tax changes in 2025?
Our suggestions are:
- Ensuring that your land is registered at HM Land Registry and that you have a note of your title number.
We often find that larger farms and estates are registered under more than one title number and we would, therefore recommend that you establish full details of all titles.
If your land is not registered, we strongly recommend that you consider a voluntary registration of your title Deeds at HM Land Registry. This is something that Moore Barlow can assist with.
- Make sure that you have your title checked for any Restrictions. Mortgage lenders or, bridging finance companies for example, will place a restriction on your title which will require their consent to the disposal or transfer of the land or property upon which their security is registered. To enable you to take prompt action it is beneficial to have full details or your mortgage lender, address and account numbers to hand.
On occasion, consent to transfer land or properties from a previous owner may be required. Again, it is of great advantage to consider these restrictions prior to instructing a transfer to take place. This ensures that the contact details for the third-party consent together with their requirements and possible costs, are obtained in readiness.
- We would also recommend that the title is checked for the restrictive covenants which can on occasion limit the disposal of the land by rights of pre-emption. Having the details ready, for any party benefiting from such a restriction can assist in mitigating any last-minute issues ahead and any restructuring plans.
- It is important to take financial and tax advice prior to transferring any property or land. It will help your legal advisors if you are able to provide full details of your financial and tax planning team to ensure a collaborative approach.
How can Moore Barlow help?
Moore Barlow’s Rural property team is an experienced team that is able to assist you with any property restructures resulting from inheritance tax planning and advice. Please do not hesitate to contact us should you wish to have an initial discussion with us or would like your title deeds reviewed.
