As we look forward to 2025, farmers are encouraged to take a measured approach and avoid making any hasty decisions around succession planning and diversification plans.

Head of agriculture and estates and partner at HCR Law, Denise Wilkinson, says the changes made during the 2024 Autumn Budget sent a wave of panic across the farming community potentially forcing farmers into making rash decisions.

“As it stands, we still don’t have the guidance that we need to make all the decisions with regards to succession planning,” she explains.

“And when it comes to succession and rethinking business structure, you shouldn’t make changes overnight.”

However, she advises farmers to sit down with their solicitors and accountants in the early part of 2025.

“There may be some things which can be done now and initiating these discussions is key,” she explains.

Mrs Wilkinson says some families may already have a plan in place that could be revisited and potentially implemented. If not, they should assess which assets currently qualify for inheritance tax relief.

“It's also worth considering discussions about involving younger family members in the business or addressing asset planning with older relatives,” she says.

“If health permits, exploring life assurance to offset tax liabilities could also be a valuable step."

She says the past year has been challenging for farming families, and 2025 is unlikely to bring much relief.

"The phase-out of BPS, coupled with uncertainty surrounding habitat-based farming support schemes like SFI (or SFS in Wales) — particularly regarding budgets, tax implications, and required capital investment and infrastructure — has increased financial pressure on farming businesses," says Mrs Wilkinson.

For farmers looking to diversify into additional income streams, Mrs Wilkinson highlights concern about proposed changes to Agricultural Property Relief (APR) and Business Property Relief (BPR), which could undermine the viability of such ventures.

"The suggestion that assets may be devalued due to reduced reliefs raises questions about funding, and the banks’ stance on these changes remains unclear," she says.

However, she explains that this is not a one-size-fits-all approach, and seeking legal advice to understand how the changes might affect your business model is crucial.

“Every farm is different, whether that’s the size, the family dynamic or the structure, so what works for one farm might not work for another,” she says.

“Talking to your solicitor and professional team is essential for making informed decisions around estate planning.”