The surprise changes to inheritance tax reliefs applying to agricultural property were enough to provoke the conversations Microsoft Co-pilot refers to in its suggested title for this article. The anxiety continued for over a year, from legislation proposal to dilution to implementation. Writing this at the end of October two years later, I wonder how many of the same solicitors (and clients!) are feeling nervous waiting for the Budget next week and any more unwelcome surprises.

Faced with a blank page, I was tempted for the first time to see what AI thought about the issue and was surprised just how easily it produced a text of reasonable length with very little prompting. It was easy to delete the naff bits about solicitors sitting around the farmhouse table with anxious looking clients but I have retained the interesting (and apt) gleanings as quotes within this text.

Co-pilot identified correctly the sense of panic induced by the 2024 announcement and even the non-farming press started reporting protests in the streets and emotional complaints of inequity but also fear. Farmers had been told their land and associated buildings and farmhouses would no longer be automatically be completely exempt from inheritance tax. New financial limits on exemptions were to be introduced and applicable to deaths after the implementation of the new rules. The risk was that parts of a family farm built up and farmed through the generations would have to be sold to meet the tax bill following death of the older generation. Farming is of course a notoriously cash poor pursuit.

We solicitors tried to calm many clients. Proposals could change and no decisions should be rushed to meet a tax deadline without suitable preliminary planning. A valuation of the farm assets would reveal if the value of assets were over the new threshold and therefore liable to tax. Next was to decide if certain assets could and should be transferred to the next generation. Any such transfer could lessen the control of the older generation who might not be ready to retire. Transfers could not be reversed if it didn’t work out. Also to be considered were the expectations of non farming children and avoiding any distribution that could cause a breakdown of family relationships.

Co-pilot thinks farmers were not interested in tax rates or the minutiae of the proposed legislation but about family succession and the plan for running the farm. This is more than just a legal or tax consideration. Suddenly it seemed essential to clients to sort out and plan where they seemed very reluctant to do so in the past. In rural solicitor circles, there has always been discussion regarding encouraging farming clients to think about and plan for succession but equally a reluctance amongst most clients to do so. This changed dramatically last year and I am sure most rural solicitors started to work with a number of clients who were actively concerned about tax and possible mitigation.

A significant increase of the tax thresholds was announced fourteen months later and as another surprise. Many fewer farms and families would be affected by the changes which were implemented in April this year.

By that time, my clients A and B had already made transfers within the family but weren’t upset as they had always planned to do so; C and D had entered into a vastly complicated family scheme that they probably wouldn’t have done otherwise; E asked me if a transfer to his son could be reversed and F couldn’t decide what to do and was too late to rush through the final decision in the weeks before the April implementation.

I will leave the final summary to my friend: