Welcome to the NFU Scotland Budget Information Hub.  This page is designed to share and signpost members to all the latest information, support templates, links and resources relating to Union’s activities following the UK budget on 30 October.  This page will be updated as and when new information and guidance becomes available so please do check-in regularly.

In a show of unity and strength, all four UK farming Unions, NFU Scotland, NFU, NFU Cymru and Ulster Farmers’ Union, will participate in a nationwide day of action on Saturday, 25 January. The day’s events will continue to highlight the damage that the UK Government’s proposed changes to inheritance tax will do and the threat to the viability of family farms across the UK. It will also thank the public for its growing support in this matter.

In Scotland, NFU Scotland will be holding coordinated, authorised tractor rallies in every region on the morning of Saturday 25 January, with the region’s local politicians invited to attend, allowing them to hear at first hand the devastating impact these proposed taxation burdens will have. While the activity taking place across all parts of the UK is likely to differ, the key unified message is the same: Unless the UK Government halts its deeply flawed family farm tax proposals, they will damage and threaten family farms and, in turn, undermine UK food production. 

The following #StopTheFamilyFarmTax tractor rallies have been organised for Saturday, 25 January:

Headline: We need the UK Government to stop; reset; reflect; and properly engage and consult on an alternative approach – one that does not have deep, unintended consequences for the future of farming.

Please write to your local MP to underline your concerns about the reform to agricultural property relief and business property relief that was announced in the recent UK Government Budget. 

A template letter is here for you to use and can be amended to set out your specific concerns.  

To find the correct MP email address, insert your postcode here: Find your MP - MPs and Lords - UK Parliament or contact beatrice.morrice@nfus.org.uk or al.walker@nfus.org.uk who would be happy to help to identify them.  

Our Taxation Helpline provider Johnston Carmichael held its Budget Implications Webinar – What You Need to Know on Tuesday, 5 November. Click here to view the recorded session by taxation experts Alex Docherty, David Ward and John McAuslin.

Following the UK Budget announcement by Chancellor Rachel Reeves on 30 October, concern has spread on what this will mean for the British agricultural sector. After meticulous analysis, Alex Doherty, head of private client tax at NFU Scotland’s tax helpline operator Johnston Carmichael, writes that the budget will have significant impact on succession planning for rural businesses. While encouraging members to reach out to Johnston Carmichael’s team of experts on 0800 023 2368, she writes:

Up until now, farmers could die holding their farm business and up to 100% Inheritance Tax relief could be available on death. Going forward from 6 April 2026, changes will be introduced to the rate of Agricultural Property Relief (APR) & Business Property Relief (BPR) when assets exceed a certain value.

Whilst there were some positive announcements on 30 October for rural business, which we touch on later, on the whole it was a rollercoaster of a day for the sector and the aftereffects will be felt over future years.  The key changes coming into place are:

The far-reaching change of the day was in relation to APR and BPR.  From 6 April 2026 there will be a combined allowance for both reliefs of £1m relieved at a 100% rate (subject to the relevant conditions for the reliefs being met).  Any value related to the business over and above £1m will receive a maximum 50% relief.

The Chancellor advised that this new approach to the rules should protect “small farms”, however given the value of land, livestock, and machinery, and the average size of a commercial farm being around 200 acres, then these changes are likely to see a significant number of farm businesses brought within the scope of IHT.

For instance, if someone dies after 6 April 2026 owning a an IHT qualifying farm with a value of £4m, then £1m will be relieved at 100% relief, the remaining £3m will receive 50% relief, seeing £1.5m subject to IHT at a 40% rate.  This would result in this example in a £600k IHT bill, required to be settled to HMRC.  Although the payments can be spread over 10 years, the first £60k will require to be paid within 6 months of death.

The relief currently proposed is also not transferrable, so if it’s not used on first death, perhaps due to the Will leaving assets to the surviving spouse and so spouse exemption in point, the relief of the £1m at 100% cannot be transferred as such to the surviving spouse.  Surviving spouse therefore has only £1m on death at 100% relief and the remaining value of the farm banks 50% relief.

Going forward, farming families will need to weigh up passing on the farm to the next generation in lifetime versus the IHT impact of continuing to own the farm on death.  The anti-forestalling measures introduced in the budget also need to be considered now when structuring any farm transfers in lifetime.  The new rules will apply for lifetime transfers on, or after 30 October 2024, where the individual making the gift subsequently dies on or after 6 April 2026 and within 7 years of the gift.  Care should therefore be taken in considering who makes any gift.  Transfers between spouses prior to a transfer of a farming interest to the next generation may be an option to consider if the owner of the land is currently less likely to survive the gift by 7 years. 

 

Once 7 years has elapsed from the date of the gift, then the value of the farm will fall outside of the death estate for IHT purposes.  Care will however require to be taken More/…  Full text is available here.

NFU Scotland members are entitled to 20 minutes FREE advice from our dedicated helpline, operated by Johnston Carmichael. Click here for more information

Please show your support calling for the UK Government to overturn its budget announcement to reform Agricultural Property Relief (APR) and Business Property Relief (BPR)