Almost half of farmers still have no plans in place outlining how they will hand their farms to the next generation – despite proposed changes to inheritance tax.
New figures from NFU Mutual show that almost 18% of farmers know it is important to put plans in place for their business – but have done nothing about it.
A further 32 % of farmers questioned in NFU Mutual’s annual Voice of the Farmer research said they did not believe drawing up a plan was relevant or important to them – despite facing a hefty inheritance tax bill.
Unique approach
Identifying who might take over when a farmer takes a step back is an important but emotional stage of farm succession planning. Each farming business is different and requires a unique approach, says NFU Mutual.
Many farmers work past state pension age because they see farming as a way of life, rather than a job. In 2025, 40 % of all farmers were aged 65 years and over. Just 5% were aged under 35, according to Defra figures.
Planning a farm succession varies on a case-by-case basis and usually takes into account farm size, type and how many generations are working on the land. But only 38% have such a plan in place, according to the NFU Mutual study.
The research also found some variations – such as 57% of cattle, sheep and livestock farmers hadn’t got around to having a farm handover plan or didn’t see this as relevant or important.
Major shake-up
The survey findings come ahead of a major shake-up of inheritance tax announced in last year’s autumn budget which has sparked huge concern in the farming community and prompted many farmers to seek financial advice.
The proposed changes will cap agricultural and business property relief from April 2026 and will also bring unspent pensions within the inheritance tax net from April 2027 – a significant move for farmers who want pass on wealth to the next generation.
‘’Before the inheritance tax proposals were announced, the approach of many farmers was to gradually hand over more of the day-to-day management to the younger generation while holding onto the ownership of the assets until a later date.
Seven-year rule
NFU Mutual chartered financial planner Sean McCann, said: “This change will prompt many to pass on the assets at an earlier stage, because if they live seven years, they would normally be free of inheritance tax.
‘’For that to work it’s important that the farmer doesn’t continue to benefit from the assets they give away.
“If they intend to continue in the business, they’ll need to pay a market rent to the new owner or if in partnership with them, reduce their profit share to reflect the new ownership.’’
“It’s important to involve the whole family when planning succession to understand what role each member of the family will play in the future, and how assets will be owned in the short, medium and long term. “