The move has major implications for succession planning and over the past 12 months since the shock 2024 Budget announcement, some clear patterns of behaviour have emerged. 

Honest conversations about succession

Within the industry, it is generally agreed that family farms will be disproportionately affected by these changes. And so, we have witnessed a significant number of honest and constructive conversations taking place. We’re seeing farming families tackle some tough succession situations – especially in larger agricultural businesses where the values are much higher – and many people who were going to transfer anyway are simply doing it much sooner, though retention of benefit remains tricky to navigate.

We’ve observed a greater use of trusts, partnerships and incorporated structures – not only for tax planning but to allow ongoing control. This is beneficial if the next generation is not yet ready or able to take up the reins, and is a sensible way of future-proofing a family business. 

The importance of carrying out a farm business audit

Another positive outcome is that many farmers are now doing an audit of their assets – something we would always recommend. The more understanding you have of what your business is worth, the more able you are to make an informed decision.

We’re seeing farmers looking at debt and rationalising their holdings by considering very carefully what they have compared to what the business actually needs, and an increased take-up of life insurance, especially among younger owners. The larger estates have always had a longer-term perspective on tax planning, where there are trustees and professional advisers on board. They’re not only looking at transferring and gifting but also budgeting in cases where inheritance tax will inevitably be applied. Reassuringly, we have not yet witnessed a significant number of farm and estate sales happening as a result of the new legislation.

However, as positive as these outcomes are, some farmers still feel unable to make a decision because they can’t see an obvious course of action. And there is no easy fix. Some farmers know they need to transfer over to the next generation, but they can’t afford to pay the capital gains tax (CGT) that would be owed, so their hands are tied. And with such an uncertain political, fiscal and global landscape, many people are simply doing nothing and hoping they live long enough to see a reversal of these tax changes.

The need for a joined-up approach

So, what have the last 12 months taught us? One clear learning from these tax changes is the need for a joined-up approach between your professional advisers.

With only months to go until the April deadline, our key message is to use the remaining time wisely. Have the important conversations with your family. Make a realistic assessment of your liabilities, your assets and your current figures, and meet with your professional advisers. In the 2025 Budget the Chancellor has sensibly conceded to spousal transfers, and has not gone further with CGT rates or IHT reliefs, so opportunities still exist to protect the family farm.  

As the old adage goes, “failing to plan is planning to fail”. Even if it’s just a call to your insurance broker to give you the breathing space needed to plan a more detailed succession strategy, it’s better than doing nothing at all.

Further information

Contact Sarah Jackson

For more rural news and views take a look at the latest edition of Savills Aspects of Land