CGT & IHT Relief for Farmers & Landowners - Managing the Risks

Introduction

The impact of reduced APR and BPR as announced in the October 2024 Budget and followed through in November 2025 has filled the post-Budget headlines in both the tax and farming press with April 2026 being so close. The role of the spouse in the succession planning with survival of the surviving spouse relief and the £1million transferable allowance. Farming has benefitted from generous IHT and CGT reliefs for a number of decades. Such strong tax reliefs have previously encouraged many investors and ‘lifestylers’ to purchase farms and landed estates resulting in strong farm values. Draft legislation has now been published. The ‘rollover buyer’ has been prominent in farm purchases. We will focus on the taxation of farming for the environment and ELMs (Environmental Land Management) subsidies as mentioned in the Spring Budget 2024 and is now the subject of a working group review (we still await the report). We look at CGT and IHT guidance in the gap before full HMRC guidance. The Spring 2024 Budget has confirmed APR on environment projects from 2025 but the Autumn Budget 2024 reduced the future rates of relief subject to the £1million allowance plus £2million.

HMRC have blatantly attacked anyone taking advantage of the generous CGT/IHT reliefs particularly with regard to ‘investment’ and ‘landlord’ status s.105(3) IHTA 1984 - tax tribunals and tax advisers have been kept very busy by this approach. One of the most recent cases is Tanner where 5 units of FHA lost the BPR claim. A good deal of farm succession planning is based on the historically strong capital tax reliefs. The changes of the Budgets of 30 October 2024 and 26 November 2025 have caused alarm for succession. We consider the Butler case of the wedding barn and loss of BPR through lack of trading. The impact on IHT planning for ill health is considered. We also consider farm diversification being held to be an investment generally and look at radical restructuring, as well as the Kingsworthy Meadow Fisheries case of the need for more services.

This virtual classroom seminar looks at the certainties and uncertainties of CGT and IHT relief for farmers and landowners, embracing what action can be taken now and tax planning around the risks of uncertainty and maximising the criteria to achieve the relief with focus on the drop of APR/BPR relief to 50%. A large area of planning involves lifetime gifting but a recent GROB (Gift with Reservation of Benefit) - case Chugtai provides a timely reminder to review GROB risks as part of the full succession planning.

What You Will Learn

This live and interactive session will cover the following:

• Focus on Autumn Budget 2024 (plus spouse amendment in 2025) regarding reduction of APR/BPR to 50% from April 2026 subject to the £1million allowance and the transfer to the spouse
• The impact of small increases in the rates of CGT
• Consideration around the announcements of the working group review on eco system/ELMs and APR was extended for ELMs from 2025 and tax planning whilst results awaited from the working party and risks thereof
• Review of what to do with BPR relief claims in the gap before the results of the working group and now
• The importance of CGT/IHT planning before contracts are signed, especially on new ELMs agreements - the risks of leaving too late
• Funding IHT liabilities - consider hitlist of assets to sell and CGT including the farmhouse following the introduction of the “mansion tax”
• The increased role of Woodland Relief and Heritage Property revival post drop to 50% APR/BPR
• The impact of farming for the environment on all IHT and CGT planning and the practical implications on probate and all succession planning
• The importance of the farm partnership agreement and Wills for IHT and CGT protection in the context of all the farming and tax updates and the impact of TRS (Trust Registration Scheme) - the risks of no agreement
• 50% BPR on non-partnership property - now 50% core rate, but 100% relief needed for use of the £1million allowance (plus spouse allowance)
• 50% APR on AHA tenancies - now 50% core rate but 100% relief needed for use of the £1million allowance (plus spouse allowance)
• Tenancy reform - the impact on IHT and CGT planning
• CGT planning on tenant farmers surrendering tenancy for capital sum
• CGT and IHT planning on farmers selling large and small development areas (Foster case) - with focus around deferred consideration and BPR on hope value with 50% BPR risk - consideration around compulsory purchase orders and loss of hope value
• CGT and IHT protection around permitted development rights option and promotion agreements
• Farm survival post the APR/BPR reduction and the subsidy gap, the importance of the tax efficient development gains, diversification and succession planning
• Consideration around lifetime gifts of the farm, holdover relief and gifts with reservation of benefit and failed PETs. The need for “meticulous planning” around lifetime gifting - see the new case of Chugtai and gifts with reservation of benefit (GROB)
• IHT efficiency of the Contract Farming Agreement (CFA) and all potential farming agreements, e.g. Share Farming and Joint Ventures - the pressure post Rock Review calling the CFA a sham - the risk of weak CFA
• The Farm Will and practical probate consideration as part of IHT succession planning and providing for IHT liabilities in Will planning under the Hall case
• The IHT and CGT efficiency of the ‘lifestyle buyer’ - impact of the farm property market - farm values show signs of some weakness
• The new Tanner case with BPR disallowed on 5 holiday units - the need to restructure not just “push the trade over the line”, but possibly “Tanner Farm Hotel”
• The complications and risks of the role of the spouse in all succession planning with the surviving spouse relief remaining and the transferable spouse £1million allowance of 100% relief

Recording of live sessions: Soon after the Learn Live session has taken place you will be able to go back and access the recording - should you wish to revisit the material discussed.