Almost half of farms do not yet have a succession plan in place ahead of inheritance tax shake-up
Almost half of farmers have not put plans in place outlining how they will hand over farms to the next generation ahead of proposed changes to inheritance tax which take effect in less than six months time.
New figures from NFU Mutual, the UK's leading rural insurer, show that almost 18% of farmers said it was important to put plans in place for the future of their business – but added they had 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.
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.
Many farmers work past state pension age as farming for many is a way of life, rather than just a job. In 2025, 40% of all farmers in England were aged 65 years and over. Just 5% were aged under 35, according to figures from Department for Environment, Food & Rural Affairs (DEFRA).
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. The proportion of farms which have succession plans in place, and that have been reviewed rose from 27% in 2020 to 38% in 2025, according to the NFU Mutual study which questioned 1,667 farmers between March and May 2025.
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.
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 often use unspent pensions to pass on wealth to family members who do not want to take over the farm.
Sean McCann, chartered financial planner at NFU Mutual, said: ‘’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.
“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. “
NFU Mutual’s Voice of the Farmer 2025 survey also found that 70% of farmers said they had a pension and 64% had investments and savings.
Sean McCann added that pensions can provide an independent source of income for older farmers, giving them the freedom to take less from the farm.
He said: “This can be particularly important when two, and sometimes three, generations are relying on the farm for their livelihood. Because of the range of options when it comes to taking money from pensions, it’s important to take advice to ensure you don’t pay more tax than you need to.”
