Almost half of Britain’s farms are heading towards a major inheritance tax overhaul without a clear plan for who will take over — a looming gap that experts warn could leave families scrambling as sweeping changes arrive within months.
New data from NFU Mutual shows that while many farmers recognise the need to plan ahead, 18% admit succession planning is important yet have “done nothing about it”, and a further 32% say they do not see a plan as necessary. This comes despite major IHT reforms taking effect in less than six months.
Succession is often a sensitive issue, influenced by farm size, type and how many generations are involved. Many farmers work well past state pension age because farming is a way of life rather than just a job. Defra figures show that by 2025, 40% of English farmers were aged 65 or over, while only 5% were under 35.
A lack of planning can carry real financial and operational risks. Without a clear succession structure, farms can face disruption, legal disputes or forced sales — particularly when rising tax liabilities collide with already tight margins across the sector.
NFU Mutual’s latest Voice of the Farmer research reveals that succession planning has improved since 2020, rising from 27% to 38%. But large gaps remain: 57% of cattle, sheep and livestock farmers either haven’t begun planning or do not believe it matters.
These findings land at a critical moment for the industry. The Government’s inheritance tax reforms — announced in last year’s Autumn Budget — have triggered widespread concern.
From April 2026, agricultural and business property relief will be capped, potentially increasing tax exposure for families passing farms down the generations.
From April 2027, unspent pensions will also fall within the inheritance tax net, a significant shift for farmers who often rely on pension wealth to support relatives who do not want to run the farm.
Sean McCann, chartered financial planner at NFU Mutual, said many farmers historically took a gradual approach: “handing over more of the day-to-day management to the younger generation while holding onto the ownership of the assets until a later date.”
But he said the new proposals may now encourage farmers to transfer assets earlier: “If they live seven years, they would normally be free of inheritance tax.”
He warns that early transfer comes with conditions. If a farmer continues to benefit from the assets they have given away, tax relief could be lost.
Those who remain involved in the business may need to pay market rent to the new owner or reduce profit share if in partnership. McCann stresses the importance of involving the whole family to clarify roles and ownership in the “short, medium and long term”.
The study also shows that 70% of farmers have a pension and 64% hold investments or savings, highlighting the role financial planning plays in supporting multi-generational farms.
McCann says pensions can act as an independent income source for older farmers, reducing pressure on the farm itself: “This can be particularly important when two, and sometimes three, generations are relying on the farm for their livelihood.”
With the clock ticking towards the reforms, advisers expect many more farmers to seek guidance to avoid unexpected tax burdens and ensure smooth transitions for the next generation.
