Farming & Rural Business Conference highlights

In a recent session chaired by Mark J Lumsdon-Taylor from MHA, key figures in the agricultural sector, including Victoria Atkins, Shadow Secretary of State for Environment, Food and Rural Affairs, and Tim Farron, Liberal Democrat MP, discussed the pressing issues facing modern farming.

As Mark aptly put it "chairing this important debate within the ICAEW agriculture conference brings together the political narrative alongside the need for accountants to be seen as the agents of business for the industry. The need for financial stewardship aligned with political policy will drive the future of farming in a sustainable way."

Victoria Atkins highlighted the distress caused by the family farm tax, which has led to significant uncertainty and impacted investment decisions in the agricultural sector. Tim Farron echoed these concerns, emphasising the need for a comprehensive food security policy and criticising the current farm payment scheme for its sudden suspension, which has meant that many deserving applicants were denied access simply because they were not “at the front of the queue.”

Both speakers agreed on the necessity of better investment in the agricultural sector. Victoria Atkins stressed the importance of abolishing the family farm tax to restore confidence and encourage investment. Tim Farron pointed out the broken market and advocated for a grocery code adjudicator to ensure farmers receive fair prices for their produce.

Victoria Atkins expressed optimism about the future of farming, emphasising the need to protect prime agricultural land and ensure food security. Tim Farron underscored the importance of a food security strategy and supporting farmers in producing food while also caring for the environment.

Water security was a key topic, with both speakers acknowledging the need for strategic planning to manage water resources effectively. Tim Farron suggested the creation of a new clean water authority to regulate the water industry more effectively.

The discussion also touched on the mental health challenges faced by farmers due to the uncertainty and financial pressures in the sector. Victoria Atkins highlighted the role of young farmers' clubs in providing support, and the need for continued funding for these organisations.

The session concluded with a call for better policies to support the agricultural sector, including the need for a comprehensive food security strategy, better investment, and support for farmers to ensure the sustainability and profitability of farming in the 21st century.

Jeremy Moody, Secretary and Advisor to the CAAV since 1995, provided valuable insights into the new rules and their implications for farming and business owners. He reminded attendees that the draft legislation is available, but the final statute legislation is still pending. One of the significant changes is the freezing of the nil rate band for 21 years. Additionally, Business Property Relief (BPR) on AIM shares is cut to 50%, and Agricultural Property Relief (APR) and BPR on qualifying assets are capped at £1 million, with a 50% relief thereafter.

These changes will significantly affect farming and business owners, requiring them and their advisors to understand more about inheritance tax than ever before. The new rules will impact the valuation of assets, including, not just land, but also livestock, machinery, and diversified activities. In many ways, we are going back to where the world was before 1992, and the test cases on the value of agricultural tenancies will be rearing their heads again.

Accurate and timely valuations are now crucial. The open market value (and not “book value” of operational assets, such as livestock and machinery, will be necessary). Risk management is essential to manage liability and ensure the business remains viable.

Gifting assets can be a strategy, but it comes with risks, such as triggering APR and BPR clocks. Succession planning is vital, considering the competence and willingness of family members to run the business, and insuring risks where appropriate.

The changes present challenges, especially for the elderly, frail, and terminally ill. However, they also offer opportunities for restructuring and planning for the future.

The seminar emphasised the need for proactive planning and understanding of the new inheritance tax rules. Attendees were encouraged to think about their business's future and take action to manage their tax liabilities effectively.

Jeremy Moody, Secretary and Advisor to the CAAV since 1995, provided valuable insights into the new rules and their implications for farming and business owners. He reminded attendees that the draft legislation is available, but the final statute legislation is still pending. One of the significant changes is the freezing of the nil rate band for 21 years. Additionally, Business Property Relief (BPR) on AIM shares is cut to 50%, and Agricultural Property Relief (APR) and BPR on qualifying assets are capped at £1 million, with a 50% relief thereafter.

These changes will significantly affect farming and business owners, requiring them and their advisors to understand more about inheritance tax than ever before. The new rules will impact the valuation of assets, including, not just land, but also livestock, machinery, and diversified activities. In many ways, we are going back to where the world was before 1992, and the test cases on the value of agricultural tenancies will be rearing their heads again.

The maximum relief for agricultural and business property combined is now set at £1 million. This change is particularly impactful for farmers, who may need to sell land to cover the inheritance tax, so, to that extent, it is an existential problem, despite a ten-year payment window – for many farms, the total profit will be less than the annual IHT payment. Additionally, gifts made on or after 30 October 2024 will be affected if the donor does not survive the 7-year period.

For those involved in furnished holiday lettings, there is evidence that the sector is now shrinking rapidly. As it does so, it’s important to note that, if FHL activities cease, there may be a balancing charge on capital allowances. Furthermore, plant and machinery used for dwellings are not eligible for capital allowances, which is a point worth bearing in mind if the property reverts to residential letting. On the other hand, if you have unused FHL losses, these can be set against general letting income in future. When FHL activities are conducted under joint ownership, VAT implications arise. Changes in ownership structure may also affect input tax recovery.

The Making Tax Digital initiative has introduced exemptions for trusts, charities, and digitally excluded individuals. Taxpayers with multiple income sources will need to file separate quarterly submissions for each source, which may mean getting multiple software licenses (unless there’s a way to export data from each business and submit it via a bridging link).

New draft legislation has been introduced regarding inheritance tax on pension pots, excluding death in service benefits. The initial tax liability is placed on personal representatives, but beneficiaries can request the scheme administrators to pay the tax. As we are all aware, there are potentially interactions between IHT and income tax here, particularly where the deceased is over 75.

HMRC is focusing on small businesses to address the tax gap (which they think is £70bn, mostly in the small business, with increased compliance initiatives expected to target this sector).

These updates highlight the importance of staying informed about tax regulations to ensure compliance and optimise financial planning. If you have any questions or need further details, feel free to reach out!

The full 2025 conference is still available to watch on-demand here:

• Watch Farming & Rural Business Conference 2025

^{*the views expressed are the author's and not ICAEW's}