Dorchester law firm Ellis jones Solicitors has given a cautious welcome to the watering down of proposed inheritance tax reforms.
The government has announced that threshold for 100% inheritance tax (IHT) relief on qualifying business and agricultural assets – originally to be set at £1 million per person – will now be raised to £2.5 million from April 2026.
This means a married couple or civil partners can pass on up to £5 million of qualifying agricultural or business assets before IHT applies. Above the threshold, a 50% relief will be applied to remaining assets.
Despite the climbdown, many estates may still exceed the IHT threshold for a variety of factors, such as property values, investments, pensions and other assets such as expensive machinery.
The so-called ‘farm tax’ was among the subjects at Ellis Jones Solicitors’ Agricultural Inheritance Tax and Succession Planning Seminar in Dorchester.
Nigel Smith, managing partner at Ellis Jones Solicitors, said: “The government’s changes are to be welcomed although concerns remain.
“Clearly the higher threshold means that some family farms will remain exempt from IHT when passed on and in turn, this reduces the number of estates affected and softens what was seen as a punitive measure.
“It is a positive step forward to help rural and family businesses reduce their exposure to IHT tax liabilities and make succession planning and investment decisions.
“While the change may benefit some businesses, other estates will still exceed the new threshold and will need to take proactive steps to plan ahead and explore strategies under the updated rules. Timing is critical, with the measures due to come into effect on April 6.”
With a few simple measures, estates could be brought down to much more reasonable valuations, and potentially below the IHT threshold.
In addition, family farmers hoping to leave their farm to their children should be planning well ahead and taking suitable action, before any drastic event, not least to avoid family disputes and distress.
Ellis Jones Solicitors’ Agricultural Inheritance Tax and Succession Planning Seminar was held at Coastland College’s Kingston Maurward in December.
The law firm joined forces with chartered accountants and tax advisors PKF Francis Clark, Coastland College and estate agents, auctioneers and surveyors Symonds & Sampson for the event.
It included information about:
- Setting up a corporate structure as an operating business for a farm, with a shareholders’ agreement
- The importance of having a proper will in place and key considerations for executors
- An update on inheritance tax legislation – the ‘family farm tax’ – and what it means for rural businesses as well as strategies to consider in order to pass wealth down to the next generations
- Advice on valuations and a market update
- Support for the agricultural community
Speakers from Ellis Jones were Chris Pemberton, a partner in wills, trusts & probate who heads up the firm’s Dorchester office, and consultant solicitor in business services Malcolm Scott Walby.
Others were Dawn Peattie and John Endacott from PKF Francis Clark, A-J Monro and Andrew Tuffin from Symonds & Sampson and Marie Taylor from Coastland College.
Ellis Jones’ Dorchester office – where Chris and an Ellis Jones team are based – is in Somerleigh Road, in the town centre.
Visit https://www.ellisjones.co.uk/business/ for more about Ellis Jones’ Business Services and https://www.ellisjones.co.uk/personal/wills-trust-and-probate/ for more about Wills, Trust & Probate.
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