Even more farmers will be affected by changes to inheritance tax 

The association has recently produced a report showing that the government had underestimated the number of farmers affected by a factor of at least five, which is 75,000 people over a generation, not 500 in 2026/27.  

What is more, its deeper analysis has unveiled another swath of farmers who had previously been excluded from the figures.  

Jeremy Moody, secretary and adviser to the CAAV, said: “Looking at HMRC’s express advice on tax returns, it states that where full business property relief (BPR) applies (as in most farming cases), the values given in tax accounts should be used, not the open market value. 

“Farmers’ accounts for assets that qualify for BPR – like machinery and livestock – are based on historic cost. This means they will be valued at significantly less than open market value.” 

However, the new rules will mean that all assets will need to be accounted for at current market value, bringing significantly more people into paying inheritance tax and adding more cost to those already affected. 

‘More money will have to be found to pay the tax’

The CAAV’s latest research shows that this change will have a particular effect on many livestock farms.  

Mr Moody explained: “Not only does HMRC allow that the ‘deemed cost’ for cattle in accounts is 60% of market value, but the statutory ‘herd basis’ option for accounting for tax on breeding and production animals is based on the original cost of a herd or flock. 

“Market value would mean a potentially massive uplift over the accounting value for a long-standing dairy herd, for example.” 

When BPR was offered at 100% on these assets, it was pragmatic of HMRC not to require them to be independently valued, so saving all parties time, effort and cost.  

Now livestock, machinery, silage and other operational farming assets will have to be valued upon death, and tax paid on anything worth over £1 million, the expert added. 

“All of this means that yet more money will have to be found to pay the tax, whether by selling more land, more operational business assets, or foregoing more income and investment. 

“It was clear from the outset that the government had not appreciated the potentially devastating implications of this new farm tax. Not only did our original research show it had underestimated its impact five-fold, by omitting large numbers of farmers from its figures, it’s now clear that even more people will be affected.   

“This hurts the people it claims to protect and protects those it claims to hurt. It is time to drop this tax,” Mr Moody concluded. 

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