A New Framework for Farming: Support, Succession and Structural Change

Landowners, tenants and farming businesses continue to operate against a backdrop of market volatility, environmental ambition and continued legislative reform. In practice, the challenge is no longer simply how land is farmed, but how agricultural relationships are structured, sustained and adapted for the long term.

As a solicitor advising across the rural sector, I am seeing a clear shift in the questions being asked. The focus has moved away from short‑term opportunity and towards resilience: resilience of farming businesses, of land use models, and of the legal frameworks that underpin them. Let’s delve into some of those recent legal developments.

Agricultural tenancies – Land Reform (Scotland) Act 2025

The reforms contained in the Land Reform (Scotland) Act 2025 seek to modernise and bring agricultural tenancy law into the 21st century and seek to give tenants greater protection where land is resumed or repurposed for non-agricultural use. The Land Reform (Scotland) Act 2025 introduced significant changes to agricultural holdings legislation, particularly in relation to resumption compensation, tenant’s improvements and diversification. Much of the legislation is not yet in force requiring secondary legislation to enact it and currently there is no set timeframe for its enactment.

One of the most contentious areas is the reform of the resumption provisions. Under the new framework, landlords resuming land from agricultural tenancies will face more prescriptive procedures and enhanced compensation obligations. These include extended notice periods, increased disturbance payments and, in certain circumstances, a requirement to share increases in capital value attributable to the change of use.  While intended to protect tenants from unfair loss, these provisions have generated concern across the sector that compensation could go beyond the established principle of leaving the tenant in a worse position but for the resumption.

Beyond resumption, reforms relating to tenant improvements and diversification are likely to have wide‑ranging practical effects. The Land Reform (Scotland) Act moves away from a fixed list of permitted improvements towards broader principles, placing increased emphasis on sustainable and regenerative farming practices. In theory, this offers greater flexibility. In practice, greater reliance on interpretation and potential referral to the Land Court may increase complexity and professional costs for both parties.

Changing support schemes – Rural Support Scheme

The new Rural Support Scheme introduced in the Agriculture and Rural Communities (Scotland) Act 2024

marks a major milestone in developing the future of agricultural support policy.

We’ve known for some time that support will be given under four pillars, base support and enhanced support make up Tiers 1 and 2, elective support (Tier 3) and lastly, advisory and complimentary support (Tier 4) going beyond simple agriculture. The Scottish Government’s recent publication has provided more detail and claims that at least 70% of support will come from Tier 1 and Tier 2, being an almost like-for-like replacement for Basic Payment Entitlement. However, it’s clear that more will need to be done to claim further support under Tiers 3 and 4 to include supporting the environment, biodiversity and rural communities.

For landowners, the key message is that support will remain available, but entitlement is now increasingly tied to active management, forward planning, and environmental compliance, all of which should be factored into business structures, leases and succession planning.

Succession Reform: APR and BPR – What farming businesses need to know

Recent changes have significantly altered the succession planning landscape for farming families. From 6 April 2026, the long‑standing assumption that farms could pass between generations free of inheritance tax has been reshaped by significant reforms to Agricultural Property Relief (APR) and Business Property Relief (BPR).

Historically, qualifying agricultural land and farming business assets could attract 100% inheritance tax relief with no upper limit. That position has now changed. A new £2.5 million cap per individual applies to the combined value of assets qualifying for 100% APR and BPR. Any qualifying value above that threshold attracts only 50% relief, resulting in an effective inheritance tax charge of 20% on the excess.

Crucially for agricultural property, APR (typically covering land and buildings) and BPR (covering the trading business, including livestock, machinery and partnership interests) are now closely linked and compete for the same allowance, making ownership structures and asset segregation far more important than before. Unused allowances can be transferred between spouses or civil partners, allowing up to £5 million to pass at the full relief rate on second death.

While inheritance tax on qualifying assets can now be paid interest free over up to ten years, the reforms place greater emphasis on proactive lifetime succession planning for all agricultural businesses.

Looking ahead

Scottish agriculture has always been adaptive. The sector has weathered market cycles, policy change and environmental challenge before. What feels different now is the scale and simultaneity of change. One thing is clear, the legal frameworks that govern agricultural land use will continue to evolve alongside the businesses they support.

How we can help

If you would like to discuss any issued raised here, please contact our Partner, Karen Craig.