Welcome news for family farms as inheritance tax threshold rises

“The recent government announcement, increasing the threshold for paying IHT from £1m to £2.5m is welcome news for many farming families this Christmas,” says Balfours’ head of rural finance, Andrew Connah.

According to Andrew, when combined with the announcement in the chancellor’s autumn statement regarding the ability to pass the allowance between Spouses / Civil Partners upon first death, the recent changes mean that up to £5m can now be inherited, upon second death, tax free and so, for many, will reduce or completely negate the pressure to pass ownership to the next generation earlier than would otherwise be deemed comfortable.

However, he cautions that while these two announcements are positive for landowners, the budget statement and this morning’s news demonstrate how unpredictable the current political landscape is. This brings into sharp focus the current volatility in the fortunes of UK agriculture.

Andrew explains: “Against such a backdrop and with lending margins becoming much more competitive than at any point since the credit crisis of 2008, now could be an opportune time to review the structure of farm finances in order to face the uncertainties of the future with renewed confidence.

Balfours Managing Partner, Rory Galliers adds: “We do of course welcome the government’s second phase of back-tracking, which demonstrates the value and achievement of unrelenting lobbying and demonstrating. It also demonstrates that this government’s reform was wholly ill thought out.

“Indeed, for many larger farms and estates with expensive land and machinery the value will be above the threshold, while operating on exceptionally narrow profit margins, rendering this tax burden unaffordable,” he adds.

For information and to arrange a no obligation initial discussion, call Andrew on 07538 321201. Andrew Connah has over 30-years’ experience in Farm Management Consultancy and Agricultural Banking and is available to conduct a confidential review of the structure of your business finances, often with no cost to the borrower.