Land-owning and farming families often face unique financial and estate planning challenges. Significant wealth may be tied up in land, property and business assets, while income can be irregular and highly dependent on market conditions, weather and government policy. At the same time, careful long-term planning is essential to ensure that land and farming businesses can be passed on to the next generation without triggering unnecessary tax liabilities or forcing asset sales.
Effective independent financial advice can play a vital role in helping farming and land-owning clients protect their wealth, plan for the future and navigate an increasingly complex tax and regulatory environment.
Understanding the challenges faced by land owners and farming families
Unlike many other businesses, landed estates and farms are often:
- Asset-rich but cash-poor, with most value tied up in land and buildings
- Multi-generational, with succession planning closely linked to family dynamics
- Exposed to inheritance tax (IHT) due to rising land values
- Operationally complex, combining trading businesses, let property and diversified income streams
Without careful planning, inheritance tax liabilities can place significant pressure on the land owner or farm, sometimes requiring land or assets to be sold simply to meet the tax bill.
The role of an IFA in farm and estate planning
Tees are independent financial advisers which means that we work alongside land owners and farming families to provide joined-up financial planning, bringing together investment advice, tax planning, retirement planning and estate planning. This often involves close collaboration with solicitors and accountants to ensure that strategies are implemented correctly and remain robust over time.
Key areas of advice typically include:
- Succession and inheritance tax planning
- Structuring ownership of land and business assets
- Retirement and income planning for older generations
- Investment planning for surplus capital
- Risk management and protection planning
Agricultural Property Relief (APR) explained
Agricultural Property Relief (APR) has long been a crucial relief for farming families, allowing qualifying agricultural land and buildings to be passed on free of inheritance tax when certain conditions are met. Typically, assets must be used for agricultural purposes and owned and occupied for a minimum period (usually two years if owner-occupied or seven years if let).
Historically, APR has provided 100% relief with no financial cap, making it one of the most valuable tools available for preserving family farms across generations.
Introduction of the APR cap and increase to £2.5m
In response to the rising cost of inheritance tax reliefs and increasing land values, the government introduced a cap on the amount of APR that can be claimed at 100% relief.
Initially, the cap was set at £1m per individual, meaning that agricultural assets above this threshold would no longer qualify for full relief. More recently, this cap has been increased to £2.5m per individual, reflecting the scale of modern farming operations and helping to preserve the effectiveness of APR for farming families.
What happens above the APR cap?
- Up to £2.5m of qualifying agricultural property continues to benefit from 100% APR
- The value of qualifying assets above £2.5m receives 50% relief
- This means the excess is effectively subject to inheritance tax at 20%, rather than the standard 40% rate
While this still represents a significant tax saving, it highlights the importance of wider estate planning for larger estates.
Spousal transfer and family planning considerations
The APR cap is applied per individual, and any unused portion can typically be transferred to a surviving spouse or civil partner. This allows a farming couple to potentially benefit from up to £5m of APR at 100% relief on second death, assuming the rules remain unchanged.
At Tees we can help structure ownership and succession plans to ensure that APR and other reliefs are maximised across generations, while also balancing fairness between farming and non-farming family members.
Beyond APR: wider inheritance tax solutions
APR is rarely used in isolation, and there are a broader range of strategies to reduce IHT exposure that could be considered, such as:
- Business Property Relief (BPR) on qualifying farming and diversified business assets
- Lifetime gifting strategies, including potentially exempt transfers
- Use of trusts to manage succession and protect assets
- Pension planning, which can be highly effective for passing on wealth outside the estate
- Life assurance written in trust to provide liquidity to meet any IHT liability
These solutions can be tailored to ensure the estate or farm remains viable while providing financial security for all family members.
Retirement and income planning for farming families
Many farmers delay retirement because wealth is tied up in the business. As independent financial advisers, Tees can help:
- Create sustainable retirement income without destabilising the farm
- Explore options such as partial succession, land diversification or investment portfolios
- Ensure pensions and investments complement farm income
This helps older generations step back with confidence while allowing successors to take control.
Why specialist advice matters
Tax and reliefs affecting land owning and farming families continue to evolve, and mistakes can be costly. Working with an IFA such as Tees, who understands the farming sector ensures that:
- Reliefs such as APR and BPR are not inadvertently lost
- Planning remains flexible as legislation changes
- Financial decisions align with both family and business objectives
Supporting land owning and farming families for the long term
Effective financial and estate planning is essential to protect land-owning and farming families from unnecessary tax burdens and to safeguard the future of the estate and the farm for generations to come.
Working with the right IFA is about more than managing money, it’s about building a trusted partnership that supports you and your family’s financial journey. With a qualified, independent, Chartered Financial Planning firm, such as Tees Financial Ltd, by your side, you gain clarity, confidence, and a strategic plan tailored to your future.
This material is intended to be for information purposes only and is not intended as an offer or solicitation for the purchase or sale of any financial instrument. It is not intended to provide and should not be relied on for accounting, legal or tax advice, or investment recommendations. Some information quoted was obtained from external sources we consider to be reliable.
Tees is a trading name of Tees Financial Limited which is authorised and regulated by the Financial Conduct Authority. Registered number 211314. Tees Financial Limited is registered in England and Wales. Registered number 4342506.
