Farmers Planning for Retirement: Why now if the time to act

For many farmers, retirement is not something that’s often spoken about. Farming is more than a job — it’s a lifestyle, a passion, and for many, an identity. Carrying on feels natural. But retirement doesn’t have to mean “putting your feet up” and walking away from everything you’ve built.

Instead, it can mean:

• Allowing the next generation to take a more active role.
• Supporting the farm where your input is most valuable.
• Slowing down to enjoy family, friends, travel, and life outside the farm.

The challenge is making sure the financial side of retirement is properly planned — both for your independence and for the future of the farm.

The draft changes to IHT rules should encourage retirement and succession planning. They make it advantageous to transfer qualifying agricultural land, property, and business assets at least seven years before death, helping to reduce the tax burden on the next generation.

Here’s what you need to know:

• You can hold £1 million of qualifying land, property, and business capital, on top of the £325,000 nil rate band and potentially the £175,000 residence nil rate band.
• Anything above these allowances may be subject to IHT, albeit qualifying assets obtain a 50% discount.
• This encourages farmers to gift land and assets down to the next generation — but only if successors are ready to take them on. If not, trust structures may be a solution.

Please note that while prior gifts may fall outside your estate, they are still considered for IHT purposes if you do not survive seven years or if you retain a benefit from the gifted assets. Retaining a benefit can include continuing to receive the same share of partnership profits, or continuing to occupy gifted property without paying full market rent. These scenarios may result in the gift being treated as part of your estate, potentially increasing your IHT liability.

That’s why careful planning — and independent income streams — are essential.

One of the biggest barriers to retirement is financial reliance on the farm. To truly step back, you’ll need to ensure you have other income sources such as:

• Pensions.
• Rental income.
• Investments.
• Personal capital you’re willing to drawdown.

If planning starts early, building this independence is easier. But even if it feels like you’ve left it late, there are still options. You might:

• Use your £1 million allowance more strategically to gain a better income.
• Receive an income for the work you undertake
• Consider releasing capital through sales (not always popular, but sometimes the right move and all options should be considered).

It is possible to model these options to create a sustainable retirement plan.

Retirement in farming is rarely just a financial decision — it’s a family decision and so:

• All children, farming and non-farming, should be considered in succession discussions.
• Early, open conversations help reduce conflict later.
• Professional advisors, accountants, land agents, and solicitors, can provide an impartial starting point.

We often begin by valuing the estate, assessing the IHT liability, and then considering whether reducing it makes sense — or whether it can be managed through the business or with insurance.

Retirement is not just about stepping back — it’s about protecting your family and your legacy whilst allowing a smooth and dignified transition for both you and the next generation.

The earlier you start, the more options you’ll have. But even if you feel behind, there may be steps you can still take.

We help farming families plan for retirement, succession, and inheritance tax. Every farm is unique, and so is every retirement journey.

If you’d like to explore your options and put a plan in place, please get in touch with our team today. A conversation now could save your family significant stress and cost in the future.