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The Autumn budget was announced on 30th October, the first delivered by Chancellor Rachel Reeves of the new Labour government.
Andrew Jenkinson, Partner & Rural Surveyor shares his expertise…
“There has been considerable commentary on last week’s surprise budget announcement regarding Inheritance Tax. Social media is alive with advice and suggestions, much of which is ill informed or plain incorrect. A balance needs to be struck between the natural human reaction of either making knee jerk changes or ignoring it entirely and burying your head in the sand.
Good succession planning has always taken time, careful thought and at times some difficult conversations. Last week’s announcement does not change this, but should bring succession planning up the priority list.
With a consultation next year and the changes being brought in from April 2026, there is time to look carefully at all the options. The government may yet alter the details but that is not to say people cannot and should not start to make plans now. Every situation is different and so a tailored solution will be needed for all. Passing assets on to the next generation has to be balanced with the other big “d”: the risk of divorce. Furthermore, most trusts, often used in Inheritance Tax planning, incur a 10 year charge, so you need to consider the following:
The focus needs to be on what is right for the business and individuals within that business.
One area which seems to be being ignored by large parts of the media, is the way the changes affect the whole business. To date there has been a focus on the land element, as the most expensive asset, but the changes proposed effect your working capital, growing crops, livestock and machinery. Many contractors and tenant farmers will have more than £1,000,000 of assets given the value of modern machinery, crops in store and livestock. At times this will vary throughout the year and it may be an easy place to start to give the next generation more control. Equally the structure of debt is going to be important moving forward, with the banks moving away from lending solely to the older generation.
The agriculture sector is unique in many good and bad ways but the importance of succession planning should now be of the highest priority. This is something which affects all businesses. With a lot of concerned people out there, speak to those you can trust whether it be a family member, friend or advisor. Everyone will have a view, with some better informed than others but hearing those views and having time to make decisions, even if the decision is to make no changes, is absolutely vital for good business management.
At Robinson & Hall, we have worked with farmers for generations and our expertise puts us in good stead to help and advise you. Please contact our Rural Property & Business department on 01234 352201 to discuss further.
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