It’s been a few weeks since the Chancellor delivered the Budget, and while the dust has settled, many farming families are still digesting what it means for their businesses. With changes to inheritance tax reliefs still a hot topic and the continued shift away from traditional subsidies, the long-term impact on UK agriculture is clear. But while the challenges ahead may seem daunting, with careful planning and the right advice, farmers can turn uncertainty into opportunity.

Inheritance Tax (IHT): Securing Your Farm’s Future

Farms often represent not just a business, but a way of life passed down through generations. Thankfully, key IHT reliefs—Agricultural Property Relief (APR) and Business Property Relief (BPR)—remain unchanged for now. These reliefs are vital tools for reducing or eliminating the tax liability when passing your farm to your children.

However, with speculation about IHT changes in the future and a growing focus on tightening tax rules, it’s critical to review your succession plans.

What You Can Do Now:

1. Maximise APR and BPR:
   Ensure all agricultural land, farmhouses, and working assets are eligible for APR or BPR. For example:
   • If part of your land is no longer actively farmed, it may not qualify for relief. Consider renting it out to a local farmer to restore eligibility.
   • Ensure any diversification projects, like holiday lets or farm shops, are structured to retain BPR eligibility.
2. Create a Clear Succession Plan:
   Work with your family to agree on who will take over the farm. For instance, a farming son or daughter may inherit the core land and equipment, while other siblings might benefit through other assets or a family trust.
3. Consider Gifting Early:
   Gifting farmland or assets during your lifetime could help reduce future tax bills, especially if you survive for at least seven years after making the gift.
4. Regularly Review Your Plan:
   Farming businesses evolve, and so do tax rules. A plan made five years ago may no longer be optimal.

Grants and Subsidies: Preparing for the Transition

The ongoing phase-out of the Basic Payment Scheme (BPS) is one of the most significant changes farmers face. However, funding opportunities through Environmental Land Management (ELM) schemes and other initiatives are growing. These schemes reward farmers for adopting sustainable practices that benefit the environment, such as improving biodiversity, reducing carbon emissions, and enhancing soil health.

Key Opportunities:

1. Sustainable Farming Incentive (SFI):
   The SFI pays farmers for taking simple steps like maintaining healthy hedgerows, introducing cover crops, or reducing pesticide use. For example, planting wildflower margins around arable fields could earn payments while enhancing biodiversity.
2. Countryside Stewardship Scheme (CSS):
   CSS offers funding for projects like tree planting, restoring wetlands, and creating wildlife habitats.
   • A dairy farm in Cornwall, for instance, might receive grants to establish riparian buffers along streams, reducing runoff and protecting water quality.
3. Capital Grants for Equipment:
   Funding is available for specific items like slurry storage, fencing, and no-till seed drills. Investing in these could improve efficiency while making your farm eligible for payments.

What You Can Do Now:

• Audit Your Land and Practices: Identify areas where you’re already meeting environmental goals and areas where improvements could unlock funding.
• Combine Diversification with Grants: If you’re thinking about new income streams—like farm tours or glamping—explore how these could align with sustainability goals to tap into grants.
• Stay Informed: Funding rules change regularly. Working with an advisor ensures you don’t miss opportunities.

Why Planning Matters

For many farming families, these changes can feel like yet another set of hurdles in an already complex industry. But with the right advice, you can turn these challenges into opportunities.

At Nicholsons, we work closely with farming clients to navigate tax, grants, and succession planning. Whether it’s creating a tax-efficient structure for your diversified farm business, helping you access subsidies, or ensuring your inheritance plans are rock solid, we’re here to help.

Don’t leave the future of your farm to chance. Let’s work together to secure your family’s legacy and make the most of the opportunities available.

Contact us today for a consultation tailored to your farm’s needs.