The 2024 UK Budget brought significant changes to inheritance tax (IHT) and wealth management that impact farming families directly. With potential shifts in tax allowances, business property relief, and agricultural property relief, now more than ever, a robust and holistic approach to wealth protection is essential. Farmers, who often have complex assets tied to both land and business, need to proactively address these changes. Here’s why working with a solicitor to establish a tailored, holistic strategy is crucial.

Understanding the Budget Changes: What Farmers Need to Know

The IHT changes announced in the 2024 Budget primarily impact tax allowances and some reliefs, like Business Property Relief (BPR) and Agricultural Property Relief (APR), both of which farmers have historically relied upon to mitigate tax on inherited land and assets. In essence, these modifications could increase the tax burden on agricultural estates, leading to a need for more strategic estate planning.

As part of this year’s budget adjustments, the potential tightening of BPR and APR qualifications could mean that some farms or farming businesses may no longer meet the relief criteria in their current form. The rate at which relief is applied might be reduced, affecting the overall tax savings many families anticipated. This has implications not only for family wealth preservation but also for the future financial stability of the farm itself.

Why Take a Holistic Approach to Wealth Protection?

An holistic approach to wealth protection means considering every aspect of your farm, finances, and family needs. For many farming families, the farm isn’t just a business—it’s a lifestyle, a legacy, and a source of stability for future generations. Proper wealth protection means planning in a way that preserves the integrity of this legacy while addressing potential tax liabilities.

Rather than focusing on one aspect of estate planning, holistic advice integrates several critical factors:

1. Estate Structure & Succession Planning

Ensuring the farm structure is optimised to pass smoothly to the next generation is crucial. This involves carefully planning ownership and succession so that children or other family members can take over without facing unexpected tax burdens. By structuring the farm to maximise available reliefs, farmers can mitigate some of the financial challenges posed by IHT changes.

2. Asset Protection and Diversification

Many farms now include diversified business streams such as tourism, renewable energy, or farm shops. Each income stream may have unique tax implications and may or may not qualify for APR or BPR. Working with a solicitor to understand how each aspect of the business could be protected from tax is essential in a post-Budget 2024 landscape.

3. Wealth Transfer Strategies

Beyond traditional wills, there are several instruments that farmers can use to pass on wealth, such as lifetime gifting or trusts. Each approach has its advantages, and each is impacted differently by the Budget’s IHT adjustments. At Wollens, we have a team of Solicitors specialising in agricultural estates who can advise on when and how to use these methods to protect your assets.

4. Protecting the Family Home

Often intertwined with the farm’s core assets, the family home is an integral part of the wealth and legacy. Ensuring that the home remains accessible to heirs without tax issues is vital. Our Solicitors  can help in understanding the most tax-efficient way to retain this critical asset within the family.

Key Wealth Protection Actions for Farmers to Take Now

Given the 2024 changes, it’s essential for farming families to act quickly. Here are some steps that can help mitigate the impact of new IHT rules:

• Review Your Current Estate Plan

Now is the time for a thorough review of your Estate. We can help identify if your current setup maximises relief and if the Budget changes have affected your tax liability.

• Consider Family Partnerships or Trusts

Family partnerships can sometimes offer tax advantages, especially when it comes to IHT. Similarly, trusts can offer flexibility in managing wealth across generations. We can can guide you on structuring these effectively, ensuring they align with your family’s needs and the updated tax guidelines.

• Explore Alternative Wealth Management Strategies

Diversification might be a key tactic moving forward. Rather than relying entirely on land-based assets, some families might consider investments or other assets to strengthen the financial foundation of the farm.

• Plan for Long-Term Care Costs

As IHT changes affect estate wealth, planning for potential long-term care costs becomes even more critical. Proactive planning now, with guidance from your solicitor and financial planner, can help ensure that these costs don’t erode family assets in the future.

Working with a Specialists: The Value of Expert Guidance

When it comes to wealth protection, especially following complex tax changes, working with a team of specialists who understands the unique needs of farming families can be invaluable. 

Our Wealth Protection team work with your existing advisors to save you time and money and to enable you to react quickly to the changing taxation landscape. By adopting a collaborative approach and bringing together the appropriate advisors into one room, all of whom have expertise in agricultural estates, we will help you navigate the nuanced changes to IHT and ensure that every element of the plan—from ownership structures to relief applications—is optimised for current tax laws.

We are proud to be recognised by The Legal 500, which evaluates law firms worldwide through annual research and client satisfaction assessments. Our ranking as a leading firm reflects our commitment to excellence and exceptional client service.

With the right guidance, farmers can protect their assets, secure a stable future for their families, and continue to preserve the land and lifestyle that’s at the heart of their identity.

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