Jurisdiction(s):
United Kingdom

Autumn Budget 2024: UK IHT reforms for farmers—£1m cap on Agricultural and Business Property Relief from April 2026; pensions in scope from 2027; trust and anti-forestalling measures

Published on: 09 January 2025

Published by a LexisNexis Private Client expert

Legal News

Article summary

What is the background to the proposal?

Since estate duty arrived in the late nineteenth century, agricultural reliefs have been central to limiting upheaval and enabling farmers to make long-term commercial and environmental choices in this vital, often multi-generational, industry over successive generations. Farmers who are asset-rich yet commonly cash-poor are especially exposed to inheritance tax (IHT), and, without full agricultural property relief (APR) and business property relief (BPR), many would be compelled to dispose of land, fragmenting long-standing family enterprises to settle the tax due.

In recent times, however, APR has been viewed as something of a loophole, with many ultra-wealthy individuals acquiring farmland to sidestep IHT. Facing a £22bn gap in the public finances, the government has therefore unveiled changes to both APR and BPR with effect from 6 April 2026, asserting that the IHT regime will be fairer and more precisely targeted in practice. Chancellor Rachel Reeves indicated that around 75% of farms and landed estates would be unaffected by the reforms. Yet this is hotly contested: the CLA (Country Land and Business Association) reports that its modelling suggests a typical 350-acre arable holding might need to sell 12% of its acreage to meet the tax burden...

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