Farmers in Oxfordshire are being urged to seek urgent financial advice ahead of major inheritance tax (IHT) reforms due to take effect next month.
An agricultural sector specialist from accountancy and advisory firm Azets has warned that the changes could create serious financial pressures for farming families and potentially force the sale of long-held land.
The reforms, set to be introduced through the Finance Act 2026, will place new restrictions on Agricultural Property Relief (APR) and Business Property Relief (BPR) for individuals who die after 05 April 2026.
Under the new rules, 100 per cent relief will apply only to the first £2.5 million of qualifying agricultural or business assets per individual, with the remaining value eligible for only 50 per cent relief.
The change could significantly affect rural families whose farms have been passed down through generations.
Hayley Kingsnorth, partner at Azets, said the way the policy was introduced has created considerable frustration among farmers and advisers.
“The problems began immediately following the 2024 budget when the restrictions were announced without any detail,” she said.
“The restrictions were effective immediately for gifts made post budget day, if the farmer were then to die post 06 April 2026 but within seven years of their gift, and so prompted the need for advice and action.
“But there was no certainty as to the legal form of the changes until the draft legislation was finally made available on 21 July 2025.”
Kingsnorth said she was surprised that the draft legislation did not reflect recommendations from the House of Commons report The Vision of Farming, published in May 2025, which suggested more generous reliefs for genuine farmers rather than applying blanket limits to all agricultural landowners.
Further adjustments were announced in the 2025 budget, including the ability to transfer unused allowances between spouses and the increase of the relief threshold from £1 million to £2.5 million per individual.
Despite the changes, Kingsnorth said many farming families remain deeply concerned.
“We meet farmers regularly and the stress and worry the policy is causing is undeniable,” she said.
“Most viable farming enterprises have a value per head in excess of £2.5 million and we have a lot of clients impacted by this change.”
She also noted the emotional toll the reforms are having on older farmers.
“Some of the older farmers feel guilty that if they live beyond 05 April, they are somehow letting their families down and consider it unfair that they haven’t been allowed time to do any planning.”
Many farms, she explained, are asset-rich but cash-poor, meaning families may have to sell parts of their land to pay inheritance tax liabilities.
Kingsnorth cautioned that inheritance tax planning is complex and that simple solutions are unlikely to work.
“This is a complicated issue and it’s not as easy as just giving some land away and then hoping you live beyond the seven-year rule when it is free from IHT,” she said.
“Trusts have been proposed as a planning option, but they won’t suit all farms and are complex – every single case is different and there is no off-the-shelf solution.”
She advised farmers to seek professional financial and legal guidance to understand how the reforms could affect their individual circumstances.
“One of our fears is that there are farmers out there who are tempted to just bury their heads in the sand and hope the problem goes away,” she said.
“Whilst we understand the uncertainty caused by the way the restrictions have been introduced may make farmers hopeful that further changes could be announced, time is running out.”
Latest figures from the Office for National Statistics show that total income from farming in the South East, including London, reached £605 million in 2024, highlighting the sector’s continued economic importance.
