Controversial inheritance tax changes come into force
The Government’s controversial changes to inheritance tax, which farming groups say "jeopardises” some of the country’s more productive agriculture businesses, come into effect today.
In her first budget in 2024, Rachel Reeves announced she was reforming agricultural (APR) and business property relief (BPR), the discount to allow farms and family businesses to be passed down through the generations.
The Chancellor said she was introducing a discounted rate on businesses valued at over £1m, a hugely contentious move that farmers said would force them to sell off land and change the fabric of the British countryside for good.
One inquest revealed that a farmer had taken his own life when worried about today’s deadline.
Just before Christmas, the Government announced that it was increasing the threshold to £2.5m, with married couples allowed to combine their relief to £5m. Those changes come into effect today.
This partial U-turn left “stoic farmers” in tears, National Farmers’ Union President Tom Bradshaw said, however he confirmed the NFU would still be campaigning against a “fundamentally flawed” policy.
“The increase in the tax threshold from £1m to £2.5m, alongside the spousal transfer secured at the autumn Budget, has come as a huge relief to so many. I've had stoic farmers in tears,” Mr Bradshaw said at the recent NFU conference.
“Make no mistake, we know it's not perfect, for some there is still tax to pay.
“But I know from the hundreds of messages that we've received, this has secured the future for many family farms, while greatly reducing the tax burden for all farms, the working people over the countryside.”
However, Mr Bradshaw made “crystal clear” that the NFU would continue to fight for the full reversal of the policy.
“The Prime Minister, Treasury and Defra Secretary of State know we still believe the inheritance tax policy is fundamentally flawed,” he said.
“It does nothing to disincentivise outside wealth investing in land.
“It risks the opportunity of longer term tenancies and jeopardises some of our more productive farming businesses. Our lobbying and detailed policy work continues.”
Frank Carr, a 34-year-old beef and sheep farmer from Malham, said the policy will continue to impact him and his family.
The NFU delegate told The Yorkshire Post: “The U-turn and the flipflopping from the Government has made it slightly more bearable, however it will continue to have a big impact as and when it happens.”
Meanwhile, when asked about the U-turn, Ms Reeves told this paper that this shows “this is a Government that listens”.
The Chancellor said: “There are very few people saying that we shouldn’t have any inheritance tax on their estates regardless of their size.
“We have listened to what people have said and we have lifted that limit to £2.5m, and as a result a lot fewer farms will be impacted by this.
“This is a government that listens, we do believe in the principle that if you are a big landowner, you should make a contribution, including through inheritance tax.
“We have listened to the concerns of people who are just above that threshold and therefore increased it.”