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.
UK Farming Unions’ alternative approach to the UK government’s proposed inheritance tax (IHT) changes
Given the significant risks to farm businesses, investment and our food security embedded in the changes to Agricultural Property Relief (APR) and Business Property Relief (BPR) announced in the Budget on 30 October 2024, NFU Scotland has repeatedly asked the Treasury to pause, re-think and consult fully on alternative approaches that can generated the required tax revenue without dismantling productive family farms and crofts. We – together with the other farming unions – are proposing an alternative approach to the planned reforms to APR and BPR. This is the so-called ‘clawback’ mechanism.
To read a briefing on how this approach can deliver on the UK Government’s objectives whilst ensuring working, productive farming and crofting businesses can be passed on with confidence to following generations
click here
#StopTheFamilyFarmTax Tractor Rallies
Several Tractor Rallies were held across Scotland in February. These events and rallies highlighted how the UK Government’s proposed changes to inheritance tax threaten the viability of family farms across the whole of the country and showed the impact this would have on businesses up and down the supply chain. Farmers and crofters also thanked the public for their ongoing support and engaged with MPs and local politicians who attended.
Key messages for the public
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.
Supporting messages:
- The government did not consult prior to their announcement on 30 October (2024) and NFU Scotland believe its data is wrong. For many it will be the final straw.
- The majority of farms don’t earn enough money to pay the potential Inheritance Tax Bill without selling off some of their land or business, which in turn can make the farm business unviable.
- There’s no options for elderly farmers. Before these measures were announced, the most effective tax advice was for farmers to hold their farm until death. Even with mitigations such as the seven-year gifting rule, some farmers may not live long enough to put their affairs in order in time.
- The Treasury has more to gain from thriving businesses paying other forms of tax and providing jobs (business income tax and employer national insurance for example) than a one off IHT bill from a no longer viable business. Current proposals are more likely to stall growth and investment.
- It will damage the UK’s food security. With less British farmers growing food, the UK will become overly reliant on imports.
Write to your local MP
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.
NFU Scotland Taxation Helpline Provider Webinar on Budget
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.
Seismic impact of Labour’s first budget in 14 years – read our initial assessment
Budget Implications – What you need to know.
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:
APR and BPR reform
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.
Tax Helpline
NFU Scotland members are entitled to
20 minutes FREE advice from our dedicated helpline, operated by Johnston Carmichael.
Click here for more information