Interview with
Tom is a Chartered Financial Planner with expertise in Inheritance Tax planning and intergenerational wealth strategies. He enjoys building long-term relationships with clients and their families, guiding them through life’s key financial decisions.
For many farming families, the farm is not just an asset on a balance sheet. It’s home, history, and heritage. It represents years of early mornings, tough winters, and pride in building something that’s handed down from one generation to the next.
Parents often continue working the farm well into later life. Even when the children are ready to take over, mum and dad are usually still involved, advising, helping, and ensuring the land is cared for in the right way. For many, the farm also provides the income needed to support them in retirement.
But from April 2026, significant changes to Agricultural Property Relief (APR) and Business Property Relief (BPR) will come into force. These long-standing tax reliefs have allowed many family farms to be passed on largely free of inheritance tax. The new rules introduce a £1m cap per person, with only partial relief above that level, meaning more farms could face sizeable tax bills on succession.
“For the families I work with, the farm is far more than an asset,” explains Tom Glanville, Chartered Financial Planner at Amber River Shipman Wealth. “It’s their livelihood, their pension, and their legacy all rolled into one. That’s why the upcoming changes feel so significant, they cut right to the heart of family and identity.”
The reforms don’t just affect numbers on paper. They could affect whether the farm can be passed on intact to the next generation, or whether parts of it need to be sold to cover a tax bill.
Who will be most affected?
The changes are likely to have the biggest impact on traditional, multi-generational farms where ownership is only transferred when parents pass away.
These farms share some common features:
- Parents are reluctant to give up control, even in later years.
- Retirement income is often drawn from the farm itself, not from pensions or savings.
- The holding needs to support both generations, parents and children, at the same time.
Farmers have also faced a surge in the costs they face. A piece of modern equipment costs as much for a small farm as it does for a large one. Rising fuel, feed, and fertiliser prices mean margins are already tight.
Adding a sizeable inheritance tax bill could be the difference between the next generation continuing the family legacy or being forced to sell land or buildings.
What’s changing?
- April 2026: A new cap on reliefs
Currently, many farms can be passed on free of inheritance tax thanks to Agricultural Property Relief (APR) and Business Property Relief (BPR). From April 2026, this will change.
- £1 million cap per person: Each individual will only be able to claim up to £1 million of relief.
- Anything above the cap: Only 50% relief will apply. In practice, that means the excess is taxed at 20% (instead of 40%).
- No transfer between spouses: Unlike some other allowances, this £1 million cap cannot be passed on to a husband, wife or civil partner.
This makes the way wills are written especially important.
“The biggest danger we see is where wills haven’t been reviewed,” explains Tom. “If everything is left to the surviving spouse, the first person’s £1m allowance could be lost, and that alone could create an extra tax bill of around £200,000.”
And it doesn’t stop there. In the £3m example often discussed, a poorly structured will could also mean losing the Residence Nil-Rate Bands (RNRBs). That could add another £70,000 to £140,000 in tax, depending on whether the farmhouse qualifies for APR.
- The £3 million maximum
With careful planning, it’s still possible for a married couple to pass on up to £3 million tax-free:
- £1m APR each = £2m
- £325,000 nil-rate band each = £650,000
- £175,000 residence nil-rate band each = £350,000
- Total = £3 million
But this only works if both owners’ allowances are fully used. Wills and ownership structures need to be set up in the right way to avoid losing allowances.
- April 2027: Pensions brought into the net
Another important change comes a year later. From April 2027, most defined contribution pensions will count as part of a person’s estate for inheritance tax.
Right now, pensions can often be passed on outside of IHT. After April 2027, their value will be added to the estate. For many farmers, this means that the personal nil-rate allowance (the £325,000 each person currently gets) could be used up entirely by the pension.
The knock-on effect is that even more of the farm’s value could sit above the APR cap and be subject to tax.

Why planning matters
Put simply, the combination of rising costs, capped reliefs, and the inclusion of pensions in IHT means that without planning, the family farm could face a substantial bill when ownership passes to the next generation.
“These rules aren’t designed to catch families out, but without planning, they easily can,” warns Tom.
In some cases, that bill might only be met by selling fields or buildings. But selling parts of the farm over time can also have unintended consequences. If the holding becomes too small to be considered viable, HMRC could challenge whether the farmhouse still qualifies for APR.
That’s why acting now matters. Planning early gives families more choice and more control, rather than being forced into decisions later.
What options do farmers have?
Every farm is unique, and the right solution depends on the family, the land, and the finances. Here are some of the strategies families and their advisers are starting to consider:
1. Utilise gifting allowances and exemptions
Although the details are yet to be ironed out, as it currently stands it appears the £1m allowance will follow the usual rules of gifts made in the past seven years. That means gifts of land or assets can be made during a person’s lifetime. If the owner survives seven years after the gift, it falls outside their estate and would not use up any of the allowance.
This could mean transferring agricultural assets to younger generations now reduces or eliminates any liability. Staggering gifts could also be used to gradually move the farm into the children’s names, potentially reducing the inheritance tax exposure, whilst still maintaining an element of control. The balance, of course, is ensuring parents still have enough to live on.
2. Trusts
Trusts may offer a way to keep the farm in the family while ensuring income for parents. HMRC is still consulting on how these might apply, but in principle a trust can provide a structure where ownership passes down, but the farm remains under family management.
3. Incorporating the farm
Some farmers may consider turning the farm into a limited company. Parents could hold preference shares (providing them with a fixed income), while children hold ordinary shares (giving them eventual control). This can be a way to separate ownership from day-to-day management.
4. Warm hand giving
This approach involves transferring the entire farm to the children during the parents’ lifetime, backed by life insurance to cover the risk if a parent dies within seven years. While it avoids the APR cap on death, it does mean parents lose formal control, which can be emotionally and practically difficult.
5. Open family conversations
Whatever option is chosen, communication is key. These decisions affect everyone, parents, children, and sometimes grandchildren. Talking openly reduces the chance of disputes later and ensures everyone understands both the plan and the reasons behind it.
As Tom explains, “There isn’t a single solution that works for every farm. The right approach depends on the family dynamic as much as the financials. What matters is starting early, involving the next generation, and putting a plan in place that gives everyone clarity and security.”
The emotional challenge
Numbers and tax allowances aside, this is a deeply emotional issue. For many farmers, the land isn’t just an asset, it’s who they are. Passing it on early can feel like letting go of that identity.
But planning doesn’t have to mean losing control. Structures such as preference shares or trusts can allow parents to stay involved, guide the next generation, and still secure their own retirement income.
Practical steps to take now
Here are some clear actions farming families can start with today:
- Review your wills – Make sure ownership is in at least two names so both APR allowances are used.
- Agree a succession plan – Decide whether the farm will continue with the family or be sold at a future date.
- Look at lifetime gifting – Explore whether staged transfers are practical without affecting retirement security.
- Secure income for parents – Through shares, rental agreements, or other arrangements.
- Include the next generation – Bring children into discussions now to avoid surprises later.
- Seek professional advice – A solicitor, accountant, and financial adviser should work together to create the best plan for your circumstances.
The upcoming changes in 2026 and 2027 represent one of the most significant shifts in inheritance rules for farming families in a generation. They don’t mean farms can’t be passed on successfully. But they do mean that careful, early planning is more important than ever.
“The good news is that with the right planning, it’s still possible to keep farms intact and pass them on,” says Tom. “It just takes a bit more forethought than it used to.”
Get in touch
Every family farm is unique, and so is the best way to plan for its future. If you’d like to talk through how the 2026 and 2027 inheritance tax changes could affect your farm, and the steps you can take now to protect it, our financial planners are here to help.
To set up an initial appointment, please call 0800 915 0000, or use our contact form to arrange an appointment.
Disclaimer
The information within this article was correct at the time of publishing, but laws and tax rules are subject to change. Your circumstances and where you live in the UK may also have an impact on your tax treatment.
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