The Government’s reforms to Inheritance Tax (IHT) reliefs for agricultural and business assets continue to be a source of concern for farming families across the UK, with many arguing that the revised rules could still create significant financial challenges when passing farms and family businesses between generations.

Originally announced in the Autumn Budget 2024, the changes to Agricultural Property Relief (APR) and Business Property Relief (BPR) proposed capping 100 per cent relief at £1 million of qualifying assets per individual, with assets above that threshold receiving relief at 50 per cent.

Following widespread opposition from farmers and industry groups, the Government revised its plans, increasing the threshold for full relief from £1 million to £2.5 million of combined agricultural and business property. Unused allowances can also be transferred between spouses or civil partners, enabling a qualifying family estate to benefit from up to £5 million of relief.

Despite these concessions, concerns remain. The National Farmers’ Union (NFU) and other representative bodies have argued that some farming families could still face substantial IHT liabilities, particularly where land values have increased significantly over many years.

As discussions continue ahead of future fiscal announcements, farming representatives are continuing to press for further reforms, arguing that family-run agricultural businesses require greater certainty to plan effectively for succession and long-term sustainability.

Beyond the tax implications, the changes have also highlighted the importance of understanding the true value and structure of farming businesses. As IHT becomes a greater consideration for many farming families, there is likely to be increased scrutiny of business assets, ownership arrangements and valuations.

Forensic accountants are often involved in reviewing complex business structures, including farming businesses, undertaking business valuations and examining financial records where there may be disputes over ownership, succession planning or the value of an estate.

In farming businesses, where assets can include land, property, machinery, livestock and diversified income streams, establishing an accurate picture of wealth and ownership can be particularly challenging.

These issues can become especially important when families are planning for future succession, resolving disputes between beneficiaries or responding to challenges from HMRC.

Detailed financial analysis can help identify potential risks, support robust valuations and provide clarity on how assets are held and managed.

Commenting on the ongoing situation, James Hardy, Forensic Director at Milsted Langdon, said: “The debate around agricultural Inheritance Tax relief has focused heavily on the potential tax burden facing farming families, but it also shines a spotlight on the importance of understanding the underlying value and structure of a farming business.

“From a forensic accounting perspective, accurate valuations, clear ownership records and comprehensive financial documentation are essential. With the availability of 100% Agricultural Property Relief now capping the amount of protection from Inheritance Tax, maintaining robust records has become more important than ever to support valuations, evidence ownership and withstand scrutiny from HMRC.

“Furthermore, as farms increasingly diversify their activities and asset bases, it becomes even more important for families to have a clear understanding of their financial position.

“Taking a proactive approach, by seeking assistance from a firm with expertise in both valuation and tax planning, can help avoid disputes, support effective succession planning and ensure there is robust evidence available should the value of assets or ownership arrangements ever be challenged by HMRC.”