Latest News

Valuation is the foundation cornerstone of effective agricultural Inheritance Tax (IHT) planning. In 2025, with increasing regulatory attention and diversified land use, getting a professional, accurate, and HMRC-compliant valuation is not just advisable, it is essential.

For decades, farming families have relied on IHT reliefs, such as Agricultural Property Relief (APR) and Business Property Relief (BPR), to pass down assets to the next generation without significant tax liabilities. However, with changes to these reliefs on the horizon, now is the time to review the approach to IHT planning.

The changes

Under current rules, which have existed since 1992, eligible agricultural and business assets can qualify for up to 100% IHT relief. But from 6^th April 2026, a new cap will be introduced for each individual:

• Only the first £1 million of qualifying agricultural and business assets that the individual owns will benefit from full (100%) relief.
• Any value above that threshold will receive only 50% relief, significantly increasing potential tax liabilities for farms and estates.

One positive amongst all the changes is that from 6th April 2025, APR will be extended to include land managed under certain environmental agreements.

Historically, many families chose to keep ownership of land until death, due to the benefits of Capital Gains Tax (CGT) uplift and the IHT reliefs. But the upcoming changes will shift the balance. Now, lifetime transfers of assets may become more tax-efficient, especially where there is no plan to sell the land.

Please note, that the proposed changes will not only affect assets held at death but will also apply to lifetime gifts if the donor passes away within seven years of making the transfer.

Review, plan and prepare

It is important to appreciate that each case will be individual according to circumstances. Whilst the Government has made headlines with its proposed changes, we do not know the full details at this stage. Draft legislation is expected in July 2025 and may be reworked in the following months.

For those in the position where time is of the essence, it may be best to act now in anticipation of the proposed changes. Otherwise, without the legislation to fully guide decision making, now is the time to review and assess. Key points to consider are who owns what land and assets, its market value, and who ultimately has the liabilities.

What needs to be valued?

The proposed cap on relief now brings into focus what is to be included as qualifying assets. For valuations in relation to the post-April 2026 period, this will now include:

• Land and property owned;
• Agricultural tenancies;
• Company shares;
• Operational assets – machinery, livestock, silage;
• Contract Farming Agreements, produce agreements and contracts;
• Diversified activities and renewables; and
• Overage agreements.

The extent of assets to be valued has expanded considerably. Knowing the value of these in relation to reliefs available is key for tax planning.  In the past, the temptation has been to use the end of year book values for some of these assets, but moving forward it is vital that market value is used so that an accurate position can be calculated.

The role of Red Book valuations

Valuations that are used for all tax purposes, to include tax planning and probate, should be conducted within the standards governed by the Red Book (the “RICS valuation bible”). The professional standards within this require comprehensive and thorough valuation reports, which are prepared with a great deal of research and clearly set out the taxpayer’s position.

With the changes proposed to the IHT reliefs, we are seeing considerable thought being given to mitigation factors and strategies being put forward by accountants and solicitors, but often with a significant under-valuation of the current assets. Without an accurate record of current assets and the effect on value of the proposal, an unexpected tax charge can arise.  For example, we are seeing overages being used to pass future development value to another member of the family with the suggestion that they have no value now, to avoid paying Capital Gains Tax on the creation of the overage. This is very rarely the case and unlikely to be accepted by HMRC or the District Valuer.

As we edge closer to receiving more updates on the proposed changes, and ultimately towards April 2026, having the full picture of what you own and the value of your assets has never been more important. Whether this is the whole farm for a sole trader, or a share of partnership assets, a full valuation and Red Book report will provide a professional review of where potential liabilities stand.

For more information on Red Book Valuations, please contact me.

Back to articles