A farm worth £11.7m – but how much will go to inheritance tax?

For many farming families, the value tied up in land, property and buildings has grown significantly over the years. Yet that wealth is rarely liquid.

When inheritance tax becomes payable, the only realistic way to fund it may be through borrowing or the sale of assets.  

Understanding the true value of the farm is therefore a critical first step in succession planning.  

To illustrate the issue, consider the fictional example of Grovelands, a farm owned by Mr Grover, aged 75.   

Grovelands is a substantial rural estate comprising a six-bedroom Georgian farmhouse, a number of cottages, agricultural buildings and around 750 acres of land, including arable farmland, woodland and grassland.   

In addition to the main holding, Mr Grover also owns a 300-acre tenanted arable farm with a grain store.   

Altogether, the estate is valued at £11.71 million.   

Why accurate valuations matter  

Many farming businesses have seen dramatic changes in land values over the past decade. Buildings that were once purely agricultural may now have development potential. Diversified uses such as equestrian activities or commercial units may also affect the value and tax treatment of assets.  

For inheritance tax planning, it is therefore important to understand exactly what the farm is worth today and not what it might have been worth when plans were last reviewed.  

This often requires professional valuation. It is not just the land that needs to be considered but a wide range of farm assets including:  

• farmland and woodland  
• farmhouses and cottages  
• agricultural buildings  
• commercial units  
• livestock, machinery and stock  
• tenancy agreements

Without a clear and up-to-date valuation, it is difficult to understand the potential inheritance tax exposure or how effectively reliefs such as Agricultural Property Relief (APR) and Business Property Relief (BPR) may apply.  

Who will take over the farm?

In the Grovelands example, Mr and Mrs Grover have three children.  

• One son has moved abroad  
• Another works in London and has no interest in farming  
• Their daughter works full time in the business and manages the farm’s DIY livery enterprise and she also lives in a cottage on the holding

From a practical perspective, the daughter is the obvious successor to the farming business. But there is more to succession that just inheritance tax planning and in some cases fair isn’t always equal. 

The inheritance tax position  

Even with agricultural and business reliefs available, not all assets qualify.  

In the Grovelands estate:  

• £8.855 million qualifies for relief  
• £2.855 million does not.   

After allowances, around £2.53 million of the estate is subject to inheritance tax, resulting in a tax liability of approximately £1.01 million.   

For many farming families, a tax bill of this scale could have serious implications for the future of the farm.  

In the next article, we explore how the inheritance tax changes taking effect from 6 April 2026 could significantly increase the tax exposure for estates such as Grovelands. 

Our rural and agricultural specialists support farming families to assess value, plan succession and manage inheritance tax efficiently. Contact us to discuss your circumstances.