The possible effects of the recent November Budget have generated a significant response in the property market – this is particularly true for some parts of the residential sector and especially within the farming community in our part of the World.
Below, we explore the main changes, potential impacts on these sectors, and strategic considerations for those affected.
- Inheritance Tax (IHT) and its impact on farming families
One of the most notable aspects of the Budget is the change to IHT. While specific details around thresholds and relief adjustments are expected to crystalise over the coming months, many farming families are already considering how these changes affect them, both right now and in the future. As we know, farm ownership is usually passed locally from one generation to another and the proposed changes to the IHT reliefs could dramatically affect these historic generation handovers. These changes may well result in earlier inter-generational wealth and property transfers – it will definitely have significant implications for estate planning for our client farming families.
We will no doubt see an increase in consideration of pre-emptive and planned earlier inter-generational gifting. Many farming clients may feel pressured to act sooner rather than later, wishing to secure their farm holdings and viability for future generations and to minimise potential additional IHT liabilities. However, we all know that navigating these changes of ownership and family dynamics is never easy – it’s crucial to collaborate with accountants and private client solicitors who understand the family’s broader financial and personal background.
Professional guidance will be essential, especially if there are unique family or business dynamics at play, to ensure that the best balance can be reached that is both tax efficient and workable for all those involved with the farming enterprise.
- Stamp Duty Land Tax (SDLT) in the residential property market
The increase in the `second home’ surcharge has, I think, come as a surprise to many and it will be interesting to see if this impacts on our market locally here. This is definitely `one to watch’.
More immediately, we will still feel the impact of the Budget on SDLT in the coming Spring. As the relief measures phase out, we will still be facing the potential “cliff edge”, especially for properties which still benefit from this relief but this will impact on the wider chains of transactions with increased pressure as the inevitable race to secure that relief heats up into next year. First-time buyers, in particular, may face increased pressure if the existing SDLT exemptions or reductions are not extended.
For property owners and investors, the impending SDLT changes may well necessitate a reconsideration of existing investment or development intentions.
- Capital Gains Tax (CGT) and Asset Planning in the Property Sector
In addition to the SDLT changes, the Budget’s handling of CGT has also attracted attention. Property investors, landlords, and even farming clients with diversified asset bases may need to recalibrate timings for property sales or disposals.
- Farmers’ uncertainty and strategic planning challenges
Farming families have long faced uncertainty regarding policy changes; be it from environmental regulation to subsidies, from Brexit to tax changes. The November Budget adds another layer of unpredictability, making it more challenging for farming families to establish stable, and workable long-term plans.
For farming families, it may feel like a daunting time to address potential changes, and it’s not always easy to initiate a conversation around future planning. However, working alongside trusted advisors can help to navigate and explore possible options. Your trusted advisors can help create space for these strategic conversations around inter-generational wealth transfer, gifting, and wider expectations to take place – allowing families to make plans and move forward even amid uncertainty.
Final Thoughts
The Budget will have a lasting impact on both the farming and property markets. Working through these changed IHT, SDLT and CGT regimes will require professional input, both from property and private client solicitors, accountants and financial advisors. Working together with these advisors gives the best outcomes, allowing for advice to be tailored to individual family circumstances and long-term goals. Making proactive and informed decisions will help to safeguard future plans, to mitigate possible tax exposure and to protect your financial security and legacy.
For further information on anything mentioned in the article, or for a property enquiry, please contact us.
WBW Solicitors has offices in Axminster, Bovey Tracey, Brixham, Chard, Exeter, Exmouth, Honiton, Launceston, Newton Abbot, Paignton, Seaton, Sidmouth, and Torquay.
This article is for general information only and does not constitute legal or professional advice. Please note that the law may have changed since this article was published.
