Q: Following the government’s announcement about upcoming changes to Agricultural Inheritance Tax, we are trying to decide whether we can keep our family farm going. Or even if it is worth it! To help with this conundrum, can you explain how the proposed 10-year IHT payment plan will work for farming families? And what would happen if we couldn’t make the farm work and had to sell before the IHT is repaid?
A: From 6th April 2026 anyone inheriting agricultural and business assets qualifying for Agricultural Property Relief (APR) or Business Property Relief (BPR) will have an option to pay any due IHT in equal annual instalments spread over 10 years. The caveat is that it will only apply to IHT on assets not sold or otherwise realised. The first instalment will become due six months after the end of the month of death and subsequent payments will need to be made annually. Provided the property remains unsold the instalments will all be free of interest. Previously, interest has been charged on tax in instalments.
The idea of being able to pay by tax-free instalments is to make cashflow more flexible and reduce the need to sell property or borrow to cover IHT liability. The new rules also offer wider eligibility for APR and BPR as qualifying assets include more than just land and buildings.
In respect of what would happen if you couldn’t make the business work later on and were forced to sell up before paying all your IHT instalments, then the outstanding balance would be payable immediately. If you failed to repay the balance immediately then interest may be applied from that point onwards.
With these changes due to come in within less than a year, this is the time to look at all available options to mitigate the effects and seek advice from a specialist in Agricultural Law who can help you plan for a future that will protect your family farm.
This question has been answered by Victoria Wilson, a Partner with GHP Legal. If you would like to speak to someone about this or any other legal matter, please visit our website www.ghplegal.com and use the contact us form, or call us on: Wrexham 01978 291456, Llangollen 01978 860313, Oswestry 01691 659194
