Farmer inheritance tax changes won't stop land being bought for tax avoidance, report finds
The Government’s inheritance tax changes will likely do “permanent damage” to rural businesses and fail to prevent land being bought for tax avoidance, a new report has found.
The Rural Accountancy Group (RAG), which is made up of 10 firms which represent 10,000 agricultural businesses, has pushed back on Rachel Reeves’ claim that the reforms will only affect around 500 farms a year.
From April 2026, farmers could pay an effective rate of 20 per cent inheritance tax on assets over £1 million.
Previously, they were exempt from this tax to allow family farms to be passed down through the generations.
Farmers have claimed that the measures will force them to sell off land to pay inheritance tax bills.
There has been a huge discrepancy on the impact between the Treasury, and groups like the National Farmers’ Union and the Country Land and Business Association.
Sam Kirkham, partner at Albert Goodman and RAG spokesperson, said: “The Chancellor has drastically overlooked the affordability of the new inheritance tax introductions for small to medium-sized farms, even spread across the proposed 10-year payback period, as evidenced by our case studies.
“We strongly urge the government to reconsider its proposals and ensure it supports the rural and small business community.”
The report found that the changes would make no difference to the Government’s stated aim of discouraging people like Jeremy Clarkson investing in land with the express aim of avoiding inheritance tax.
While the Office for Budget Responsibility has found the measure would only bring £500m to the Exchequer over a three-year period.
The RAG has suggested that the Treasury increases the Agricultural Property Relief qualifying period from two to 10 years, to make buying land less appealing for people attempting to reduce their tax liability.