A warning has been issued over the potentially “serious impact” of rumoured changes to inheritance tax in Chancellor Rachel Reeves’ upcoming budget. The National Farmers’ Union (NFU) has expressed concerns that family farms could be greatly affected by any alterations to the current rules. As it stands, farmed land benefits from Agricultural Property Relief (APR), allowing working farms to be passed down to the next generation without incurring inheritance tax, provided they are operational farming businesses.
However, speculation suggests that adjustments to thresholds, imposition of upper limits, or even the removal of APR altogether could have significant consequences for farmers. The NFU’s analysis indicates that eliminating APR would result in a mere £120 million annual saving for the Treasury, but the repercussions on the farming sector would be far more substantial. NFU President Tom Bradshaw emphasised that APR is crucial for the continuity of small family farms across generations, jeopardising many families’ succession plans and undermining government objectives for food and environmental security.
The Treasury is set to unveil the budget on October 30, with no official announcements yet on potential changes to inheritance tax relief. Exchequer Secretary James Murray acknowledged the existence of divergent views on the matter, with varying opinions from stakeholders such as Family Business UK and the Country Land and Business Association. Conservative MP Harriet Cross underscored the importance of APR and Business Property Relief in securing the future of farming and family businesses, cautioning that without these reliefs, business assets could be subject to a full 40% charge.
Lib Dem MP Alistair Carmichael highlighted that alterations to inheritance tax reliefs could inadvertently impact the wider rural community, affecting not just farmers but also veterinarians, agricultural merchants, local businesses, and post offices in economically vulnerable areas. The debate continues as the implications of any potential changes loom large over the farming sector.
The intricacies and potential consequences of the rumoured inheritance tax adjustments have sparked concerns among farmers and industry experts alike. With the fate of family farms hanging in the balance, the upcoming budget announcement holds particular significance for the agricultural community.