While Scottish Land & Estates has warned of a triple blow to Scotland’s rural businesses caused by the budget, Wbg, one of Scotland’s leading independent specialist full-service accountancy firms, has cautioned farmers against a kneejerk response to budget announcements.

Rachel Reeves’ budget heralded a cut to Agricultural Property Relief, ‘Barnetisation’ of the Agriculture Budget and an increase in pick-up vehicle taxes.

While the cut to relief on Agricultural and Business Property for Inheritance Tax was regarded by Scottish Land & Estates as a threat to the future of farming and food security in Scotland, Mark Mulholland, partner in Wbg’s Business Advisory department, said that the majority of farmers he’s spoken to acknowledge that there could be a problem with the proposals in the budget, but that the ‘devil’s in the detail’ and legislation has yet to be passed.

The budget seeks to change agricultural property relief (APR), whereby family farms are passed down tax-free so that from 6 April 2026, the full 100% relief from inheritance tax will be restricted to the first £1m of combined agricultural and business property.

Above this amount, landowners will pay inheritance tax at a reduced rate of 20%, rather than the standard 40%. This tax can be paid in instalments over 10 years interest free, rather than immediately, as with other types of inheritance tax.

“There are a range of scenarios at play here, whereby the value passed tax free from inheritance tax can be anything up to £3m of a couple down to £1.3 million for an individual farmer,” noted Mulholland.

And while Scottish Land & Estates bemoaned the budget announcement that farmers must now contend with an increase in taxation of double cab pick-ups, Mulholland noted the resourcefulness of farmers.

“Farmers are often very resourceful,” he said. “They often don’t need double-cab pickups and are content with a single-cab pickup or buying a trailer and hitching it onto the back of a tractor.

“Given that the proposed changes to inheritance tax do not come into effect until April 2026, my advice would be for farmers to make themselves aware of the proposed changes and take the time to start planning ahead for those changes around spring/summer 2025, a year ahead of their implementation.”

For further information please contact Mark Mulholland on 0141 566 7000.

Issued on behalf of Wbg by Liquorice Media tel 0141 332 4935 www.liquorice-media.com

Date: 21 Nov24