What the New Inheritance Tax Rules Mean for Your Farm

Ask a farmer what the business is worth and they’ll struggle to tell you in money they could lay their hands on by Friday. The wealth is real. It’s standing in the fields and parked in the sheds. It just isn’t liquid, and for most of agricultural history that distinction never troubled HMRC. From 6 April 2026, it does.

The rules on Agricultural and Business Property Relief changed for the first time in more than forty years. Full inheritance tax relief now covers the first £2.5 million of qualifying assets per person, up to £5 million for a married couple, with a reduced rate above that threshold. The detail belongs in a conversation with your accountant. The direction of travel doesn’t need one explained: some farms now face a future tax bill where none existed before.

The harder problem isn’t the size of the bill. It’s where the money to pay it comes from. A farm can be worth several million on paper and still struggle to find five figures in cash without selling something. If a liability has to be met and the farm has no spare liquidity, land or equipment becomes the fallback — exactly the outcome generations of succession planning were meant to prevent.

That makes flexible cash a different kind of asset than it used to be. Worth considering now:

• Reviewing succession plans early, with proper professional advice
• Keeping working capital free rather than locked into equipment
• Spreading the cost of machinery so reserves stay intact
• Avoiding large one-off outlays that quietly narrow your options later

The connection to how you buy kit is more direct than it looks. Paying outright removes cash from the business in a single stroke — cash that, after April, may be doing more important work sitting in reserve. Financing keeps the equipment working for you while the money stays where it has the most flexibility to matter.

We’re not tax advisers, and the inheritance question is one for your accountant. But on the cashflow side of this, it’s exactly where we can help. Buckingham Leasing spreads the cost of equipment so more cash stays in the business and your reserves remain available for whatever the years ahead actually demand of them — succession included.

What to check before you commit

The right answer starts with the farm's own year. A machine that is essential in April may be easiest to pay for after harvest. A livestock business may want a different rhythm again. The finance should follow the income pattern, not the other way round, because the strongest agreement is the one that feels ordinary once the asset is working.

It is also worth separating the price of the machine from the cost of waiting. Repairs, fuel use, contractor bills, missed weather windows and lost capacity can all be more expensive than the monthly payment on properly chosen kit. That does not mean every purchase should go ahead. It means the comparison has to include the real cost of running without it.

How finance should be structured

For most farms, the useful conversation is not simply hire purchase versus lease. It is ownership, VAT timing, seasonal payments, term length, deposit level, part-exchange value and how the agreement sits with tax advice. Those details decide whether the purchase supports cash flow or strains it.

A fixed agreement can give certainty in a year where input prices, grain, milk, stock values and weather all move. The payment becomes one known figure against a set of unknowns. That is often the real value: not just access to the machine, but a calmer way to plan around it.

The Buckingham Leasing view

What the New Inheritance Tax Rules Mean for Your Farm should be judged on practical use. Does the asset earn, save, reduce risk or open up work that is otherwise out of reach? If it does, the finance can usually be shaped around the season and the asset's working life. If it does not, waiting is not failure; it is good judgement.

Bring us the machine, supplier quote, expected use and timing. We will put clear figures around the options so you and your advisers can decide with facts rather than hunches.