Succession – The Talk Around Every Farmhouse Kitchen Table

Since the Budget announcements of 30^th October 2024, I would find it hard to believe that the matter of ‘succession’ has not been raised around almost every farmhouse kitchen table across the nation.  If it hasn’t, then it absolutely should be!  Succession planning was always a thorny topic for many farming families, however, due to the Budget, there will need to be a cultural shift within the industry, with many of our clients starting to discuss ‘next steps’.

Prior to the Budget, the Inheritance Tax regime had done nothing to dissuade many active farmers from retaining ownership of their business and land, safe in the knowledge that on their death, their estate should receive 100% inheritance tax reliefs.  Although this may have been advantageous for taxation purposes, it often did not give rise to any meaningful discussion on succession, frequently leaving the next generation in ‘limbo’.  The Budget proposals have now flipped this general principal upside down and although the finer detail is yet to be announced, we are seeing farming families considering succession and estate planning earlier.

Whilst succession planning was not on the Budget’s agenda, this does appear to be at least one positive side effect.  The matter of succession has been at the top of every rural business advisor’s suggested advice for years, including solicitors, accountants and land agents.  Such lack of discussion and communication within a family farm can often lead to greater levels of uncertainty within the family and business, greater incidents of family tensions and potential reduced investment.

We are only a month after the Budget, but we are seeing an increasing number of clients seeking advice and assessing their own situation and discussing the relevant ‘next steps’, including the conduction of farm valuations for business review, assessing partnership and business structures and discussing potential lifetime gifts.  It is important to note that any decision requires careful consideration and professional advice as every business and family situation is different, however the important matter here is the fact that ‘succession’ and ‘next steps’ are actually being discussed and openly reviewed, rather than cast to the side.

Succession planning for tenant farmers also requires the same level of consideration and although such Budget implications are not as obvious, we could start to see market changes in the land rental sector, subject to landlords potentially selling land, or rents increasing dependant on land availability. As a separate note, the recent changes to the Succession Rules under the Agricultural Holdings Act 1986, removing the minimum age for a succession application on retirement is another conversation tenants under such agreements should be discussing. As a final point, it is important to note that tax is only one element of business decisions and although the Budget has given rise to some major concerns within the agricultural community, I would advise all in the industry to use this as an opportunity to discuss the future.  As many clients state afterwards; “A problem shared is a problem halved”.