Damning new AHDB data sheds further light on IHT impact 

The AHDB has calculated that nearly 77% of farms (42,204 out of 54,938) across England and Scotland will be impacted by the new inheritance tax rules.

The new rules, announced in October, will see the full 100% relief from IHT restricted to the first £1m of combined agricultural and business property, from April 2026. 

AHDB’s new independent analysis looks at average balance sheet data – mainly sourced from Defra, the Farm Business Survey and the Scottish Government. 

More than half of those farms affected are involved in cereals or general cropping production as their main enterprise. The rest are predominantly livestock producers or mixed farming operations. 

AHDB analyst Tom Spencer said: “Our calculations show that cereals and general cropping farms are the most likely to be affected due to their scale and asset size. 

“For livestock farms, it is those businesses with single person ownership that are most at risk.” 

Seeking advice is critical

AHDB has already reported that due to the low rate of return on net current assets in farming, the most cost-effective way a cereals producer could pay their expected tax burden would be to sell parcels of land.

AHDB’s economics and analysis director, David Eudall, stressed that the debate around whether changing IHT is the right decision, is “not for AHDB to comment on”. Rather, it’s priority is to help explain how it will impact levy payers and support them in navigating a path through the challenges. 

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“The first stage has been to identify the farms at risk, so they can review their own circumstances and implement appropriate actions. 

“There are 300 working days until 1st April 2026, when the tax changes come into effect. 

“This means 140 farming businesses across England and Scotland per working day, from today (28th January 2025) onwards, will need to ensure their business is set up to manage their tax implications.  

“It is critical for any affected farming enterprise to seek out expert tax and business planning advice. 

“Succession planning was already important in agricultural farming businesses, now it is essential.”

You can listen to a more comprehensive analysis of AHDB’s findings along with the thoughts of tax expert Luke Cochrane in the latest Agonomics podcast here: Agonomics with David Eudall 

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