Crops, cattle and capital at risk: What the IHT changes and divorce rules mean for Yorkshire farmers

As part of the government’s budget in October last year it was announced that there are set to be far-reaching changes in respect of inheritance tax (IHT) relief allowances for agricultural property (as well as business property).

Since the Autumn Budget, we have seen a growing trend in farming families and landed estates seeking to gift agricultural land to younger members of the family during their lifetime in order to avoid the tax changes that are set to come into effect from 6 April 2026.

Whilst there are a number of unwelcome tax ramifications in providing such gifts, which are beyond the scope of this article, the knee jerk ‘reactionary’ gifts that we are being asked to advise upon fail to take into account the very significant impact that a potential future divorce may have on the family farm, particularly in situations where the recipient of the gift is an adult child, married or otherwise.

What happens should my children divorce?

Upon divorce, the matrimonial assets are divided with the ‘yardstick of equality’ in mind, potentially causing very significant ramifications for the future operation of the farm, and the livelihoods of the wider family.

As such, before any gifting of land takes place, it is imperative that advice is sought, not only in respect of the tax ramifications, but also in relation to how a future divorce of the recipient of the gift could impact the security of the family farm. Without doubt, advice needs to be sought in relation to the operation of both Pre and Post-Nuptial Agreements (the only difference being whether the Agreement is entered into either before or after the marriage) and how such Agreements can be utilised to protect the family from an unwanted divorce, and a potential sale of the family farm.

Whilst Pre and Post-Nuptial Agreements are not legally binding the court will likely be significantly influenced by such agreements upon divorce, provided they are entered into correctly and provide a fair settlement for the parties. Both Pre and Post-Nuptial Agreements can, therefore, assist in protecting the family farm to ensure it remains in the family following marital breakdown, particularly should it be determined that the benefits of gifting of land at this stage is beneficial to the wider family.

For any questions regarding protecting assets on marriage and the operation of both Pre and Post-Nuptial Agreements, please contact Alison Benson at Wilkin Chapman Rollits on,

01482 337363,email [email protected] or visit Agriculture Solicitors | Legal Support For Farms & Families