Preparing for Inheritance Tax Reforms 2026: Essential Updates for Rural Landowners

Prepare for the 2026 Inheritance Tax Reforms Essential Updates for Rural Landowners

What we will cover The new rules and key timelines Impact on rural landowners Planning opportunities Practical next steps #CLAWebinar

Budget announcements Draft legislation not yet available Limits on APR and BPR only, other exemptions and reliefs are unaffected 100% relief on first 1m, 50% relief on value above this threshold Nil rate band of 325,000 and residence nil rate band of 175,000 Environmental land in scope, limited to government scheme Starts 6 April 2026. Important to get advice #CLAWebinar

Example Widowed smallholder Farm is worth 1.5 million Modest farmhouse worth 450,000 But agricultural value is only 300,000, meaning 150,000 cannot be covered by APR Spouse already used up NRB and RNRB on their death #CLAWebinar

Example Current rules ( 000) New rules ( 000) Farm 1,500 1,500 Farmhouse (Ag value = 300k only) 450 450 Total estate 1,950 1,950 Less 100% APR / BPR Less: 50% APR / BPR Chargeable estate (1,800) (1,000) (400) 550 n/a 150 Less: NRB Less: RNRB Taxable estate (150) Unused (325) (175) Nil 50 IHT @ 40% Nil 20 #CLAWebinar

Impact of IHT changes Livestock farm in partnership between husband and wife 1,000 acres with 4,000 animals (mixture of cattle and sheep) Modest farmhouse worth 400,000 But agricultural value is only 280,000, meaning 120,000 cannot be covered by APR The couple will use all their IHT allowances #CLAWebinar

Impact of IHT changes (Figures in '000) Farmland (1,000 acres) Farmhouse (Ag value = 280k) Farm buildings Equipment and machinery Livestock Total Less: NRB Less: RNRB Taxable estate Market value APR / BPR Chargeable estate 9,000 (5,500) 3,500 400 (140) 260 500 150 750 (250) (75) (375) (6,340) 250 75 375 4,460 (650) 10,800 Unavailable 3,810 IHT @ 40% 10-year instalment % of land to sell 1,524 152 17% #CLAWebinar

The 1 million allowance It is per person, and not transferable between spouses/civil partners Use it or lose it! Consider leaving assets to successor on first death Alternatively, use a discretionary trust on the first death Make sure assets in joint ownership, as tenants-in- common #CLAWebinar

Types of Joint Ownership Joint Tenancy Tenancy-in-Common Wife Husband and Wife Husband Trust Wife Wife #CLAWebinar

Trusts Subject to the same new rules Created before 30 October 2024 full 1m allowance Created after 30 October 2024 allowance shared with other trusts created by same settlor after that date https://www.cla.org.uk/news/in-focus-family-trusts/ #CLAWebinar

Lifetime gifts Your financial position Can you afford to give up the income? Watch out for Reservation of Benefit or Pre-Owned Asset Tax What is best for the business? Capital Gains Tax implications - https://www.cla.org.uk/news/in-focus-capital-gains- tax-and-reliefs-explained/ #CLAWebinar

Lifetime gifts Anti-forestalling rules Life insurance Could pay out if die within 7 years Take financial advice to understand costs Mortgages Check with the lender Stamp Duty Land Tax Impact on holdover relief from CGT #CLAWebinar

Your Next Steps Ascertain ownership Get valuations CLA Succession Planning Hub: https://www.cla.org.uk/campaigns/succession- planning/ CLA advice advice@cla.org.uk Speak to your professional advisors #CLAWebinar

Any questions? #CLAWebinar