What does the Spring Statement and Autumn Budget mean for farmers and landowners?

The agricultural sector is navigating a period of massive change. Economic headwinds, tightening policy, and shifting environmental priorities are reshaping how farmers and landowners plan for the future.

At the same time, recent fiscal announcements, most notably the 2024 Autumn Budget and the March 2025 Spring Statement have introduced reforms with significant long-term implications for estate planning, tax relief, and intergenerational succession.

Against this backdrop, the need to plan proactively has never been more crucial. Our agriculture and estates team is helping farming families understand how the evolving tax landscape impacts their assets and what they can do now to safeguard their legacy.

A challenging outlook for British agriculture

From volatile market prices to increasing regulatory pressures, farming businesses are under strain. Rising input costs, labour shortages, and weather extremes are making profitability a challenge. Meanwhile, changes to subsidy regimes and uncertainty over land use, particularly with a growing emphasis on environmental land management schemes, are forcing a rethink in how farms operate and generate income.

The Spring Statement, while relatively light-touch in farming-specific policy, failed to address core issues such as the rising cost of borrowing and the urgent need for capital investment in infrastructure and automation. Farmers Guardian and FarmingUK highlighted concerns that rural communities were again overlooked, reinforcing the importance of using available financial planning tools to support stability.

However, the 2024 Autumn Budget did bring substantial changes to inheritance tax (IHT) reliefs that will shape how farms are transferred and managed across generations.

Key changes to agricultural and business property relief

From 6 April 2026, a combined £1 million allowance will apply to agricultural and business property qualifying for 100% relief. Any qualifying property above this threshold will be subject to 50% relief. For example, if a farming estate includes £6 million in agricultural property and £4 million in business assets, only £1 million (proportionately split between the two) will be eligible for 100% relief. The remaining value will be taxed at 50%.

This marks a significant shift from the current system, where 100% relief can apply with no cap. While the government argues the move aligns with broader tax policy aims, it introduces complexity and, for many, a potentially higher IHT liability.

In parallel, business property relief will be reduced from 100% to 50% for shares traded on unlisted recognised stock exchanges such as AIM. This reduction is another blow for farming families holding diversified business assets or operating through listed investment vehicles.

Trusts and the £1 million allowance

For trusts, the allowance will also be capped at £1 million per trust for 100% relief on qualifying property. This will refresh every ten years and apply to both anniversary and exit charges. Transfers made before 30 October 2024 will remain subject to existing rules until any qualifying property added on or after this date is brought under the new regime.

Notably, if a settlor transfers to multiple trusts, the £1 million relief will be apportioned unless the trusts were established before 30 October 2024 and already contain qualifying property. This introduces strategic opportunities – and risks – when structuring family succession plans.

The current Government consultation proposes to bring qualifying property settled into a relevant property trust before 30 October 2024 into the new regime on the trust’s next 10-year anniversary, which falls on or after 6 April 2026. Qualifying property that leaves a trust (settled before 30 October 2024) will continue to attract 100% relief until the date of the trust’s next 10-year anniversary.

Will planning

One of the biggest takeaways we have noticed from our work with clients is the importance of reviewing wills and succession structures well ahead of April 2026. With the £1 million allowance non-transferable between spouses, it’s a case of “use it or lose it.”

We are advising many farming families to:

• Transfer assets to spouses or adult children where appropriate.
• Reorganise ownership structures to maximise access to the £1 million allowance.
• Consider bare trusts for minor children or more substantive trust arrangements to preserve control and flexibility.

The extension of agricultural property relief to land managed under environmental agreements (effective from 6 April 2025) is a welcome step. However, for agricultural property relief to apply, buildings and land must still meet the “character appropriate” test – a reminder that detailed valuation and planning remains essential.

Pension planning

Pensions continue to play a significant role in estate planning. From April 2027, new rules will impact how pensions interact with IHT. Currently, unused pension funds can often be passed on free of inheritance tax, an opportunity that may be curtailed soon.

With Residential Nil Rate Band (RNRB) and Nil Rate Band (NRB) thresholds now frozen until April 2030, the tax burden on larger estates is increasing in real terms. For many clients, a careful balance of pension use, lifetime gifting, and trust strategies is the most effective way to retain flexibility while managing tax exposure.

Our Independent Financial Advisers work alongside legal specialists to create cohesive plans that reflect both personal priorities and the current tax framework. This includes:

• Making lifetime gifts to start the 7-year IHT clock.
• Using trusts to control when and how wealth is passed on.
• Building in liquidity (e.g., through life insurance policies) to meet IHT liabilities.

What should farmers and landowners do now?

With change on the horizon, we recommend the following steps:

1. Review your will – particularly if it was written under previous agricultural property relief/business property relief assumptions.
2. Consider restructuring ownership – to make the most of the £1 million relief cap.
3. Evaluate trust arrangements – to ensure they still align with the new rules.
4. Commission professional valuations – of both business and agricultural assets.
5. Explore pension planning opportunities – especially if approaching retirement or considering succession.
6. Stay informed – as the government consultation on these changes runs until April 2025, further refinements are possible.

Our final thoughts

This year’s fiscal announcements have brought the future of farm succession and estate planning sharply into focus. While the £1 million relief cap offers clarity, it also increases the burden on farming families to plan proactively and seek joined-up professional advice.

We’re here to help clients make sense of the changes and shape a resilient future for their farm, finances, and family. Our team brings together legal and financial expertise tailored to the agricultural sector so you can act with confidence, not confusion.