BUDGET COMMENT: Welcome relief for farmers, but family businesses still face uncertainty over inheritance tax

In response to the Chancellor’s Autumn budget announcement today, please see below comment from Frank Smith, Managing Director of Cheltenham-based Frank Smith & Co. Solicitors, a specialist law firm which has 100 years combined legal experience in private client and property law.  

Frank is a nationally recognised legal expert with over 20 years’ experience. Before founding Frank Smith & Co in 2016, he was previously a partner and head of department at Harrison Clark Rickerbys and Willans LLP. 

More needs to be done to address the longer-term challenges facing family-run farms and businesses. 

The extension of the red diesel duty cut until July 2027 will be welcomed farmers, it offers only short-term relief 

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"For many individuals, farming families and rural businesses, this year’s Budget is likely to feel like a missed opportunity as families look for the certainty they need to protect the businesses they have worked hard to build. 

"While the extension of the red diesel duty cut until July 2027 will be welcomed farmers, it offers only short-term relief. More needs to be done to address the longer-term challenges facing family-run farms and businesses. 

"One of the biggest disappointments for farming and business families will be the Government’s decision not to revisit the changes to Agricultural Property Relief (APR) and Business Property Relief (BPR), which affect the inheritance tax relief available when passing on farms and businesses. Although the £2.5 million allowance for 100% relief, introduced in April 2026, was a concession from the Government’s original proposals, concerns remain about the impact of the reforms on succession planning. For families whose wealth is largely tied up in agricultural land and business assets, the challenge is ensuring that a viable farm can be passed to the next generation without creating an unsustainable financial burden. The continued freeze on inheritance tax thresholds adds to these concerns, as rising asset values can bring more families within the scope of the tax over time. 

"The Budget has also left the planned inclusion of most unused pension funds and pension death benefits within the inheritance tax regime from April 2027 unchanged. While some technical changes to pension death benefit rules have been announced, families still need clear, practical guidance on how the wider changes will work in practice. This includes understanding how pension savings may affect an estate’s inheritance tax liability, how any tax due will be paid and what this means for those administering an estate. Without greater clarity, planning for retirement and deciding how best to pass on savings to loved ones may become more complicated. 

"Families and business owners need a tax system that allows them to make long-term decisions with confidence. The Budget provides some welcome short-term support for farmers, but leaves wider concerns about inheritance tax and the transfer of family wealth unresolved. Greater certainty around the long-term tax treatment of family farms and businesses, alongside clear guidance on the forthcoming pension changes, would help families plan ahead. For farmers in particular, they want reassurance that they can run a farm that supports the family and can be passed on successfully to the next generation." 

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Editors notes

Frank Smith & Co Solicitors is a bespoke, Cheltenham-based law Firm with many years’ experience in the legal sector and a full understanding of the requirements of those who want to buy, sell, manage, or develop their property or attend to their personal affairs. The law firm is competitive on costs yet remains highly responsive to its clients’ needs and provides service levels worthy of higher cost larger law firms.

The firm delivers property and private client legal advice in a personal and effective manner and is committed to making costs as fair and transparent as possible without having to ask clients to pay the high price tag common with larger law firms. Each matter dealt with is costed individually, and each fee charged is agreed with its clients at the outset.