Inheritance tax plans unveiled in the Budget last autumn and expected to take effect in April 2026, would cap Business Property Relief (BPR) and Agricultural Property Relief (APR) at £1 million, with 50% relief on amounts exceeding that amount. This means that 40% tax would be applied to 50% of the value of business and agricultural property over £1 million. A group of farmers and business owners has demanded a judicial review of government plans. Read on to find out more.
The Argument
The claimants are requesting permission from the High Court to contest Chancellor Rachel Reeves’ decision to conduct a technical consultation on only specific portions of the revisions, arguing that this is a breach of her public law duties. They believe the government should be held accountable for its public law obligations regarding tax policy.
The Environment, Food, and Rural Affairs (EFRA) Committee of Parliament urged ministers in May of this year to delay final decisions on APR and BPR amendments until October 2026 and to delay the implementation of any new regulations until April 2027.
In addition to giving individuals who will likely be impacted more time to plan and consult with experts, the committee recommended that this scheduling change allow for better formulation of tax policy and provide the government with an opportunity to convey a positive long-term vision for farming.
Negative Impact of Proposed Changes
The potential negative impact on farmers includes:
- Reduced relief cap – APR and BPR used to exempt most farms from inheritance tax by 100%. New restrictions cap agricultural and corporate property worth £1 million for 100% benefit. Above this threshold, 50% relief applies.
- Taxes – Even small family farms exceed the £1 million barrier for land, buildings, machinery, and cattle. Farms previously free from IHT may suddenly owe hundreds of thousands of pounds in taxes.
- Asset Sales – Many farmers are asset-rich but cash-poor, making it difficult or impossible to pay high IHT bills from farming profits or rental income over 10 years. Farmers may have to sell land, cattle, or other vital assets to pay the tax bill.
- Future farming generations – The changes threaten the continuity of family farms. The financial burden may deter younger generations from continuing the family business, leading to the closure or fragmentation of long-standing farms.
- Food – Agricultural organisations worry that weakening the financial sustainability of UK farms might reduce domestic food production and increase food imports, threatening national food security.
Contact Fleetwood Heir Hunters on 020 8432 3101 .