Spotlight On UK Agriculture Inheritance Tax Hikes

Amanda Cheesley

20 November 2024

Following UK Chancellor of the Exchequer Rachel Reeves' Autumn Budget in October, which included a series of tax hikes expected to raise taxes by £40 billion ($52 billion), wealth managers assess the impact of the inheritance tax increases on agricultural businesses.

Inheritance tax, which is charged at 40 per cent above a threshold of £325,000 ($422, 000), will stay frozen until 2030, according to Reeves, but agricultural and business property business relief will be reformed with assets over £1 million facing a 20 per cent rate. A 50 per cent relief will be applied in all circumstances on inheritance tax for shares on the Alternative Investment Market (AIM). The change will take effect from April 2026, and it is expected that it will force more land onto the market in order to meet IHT bills.

“It is clear to see why such sudden and sharp changes to Agricultural Property Relief and Business Property Relief have angered the UK’s farming communities – many of whom feel that they will be unable to hold onto land that has been in their family for generations,” Ingrid McCleave, partner at UK law firm , a firm specialising in lifetime and post-death tax and succession planning for UK individuals, said.

“The government’s approach does not seem to be based on accurate figures, and doesn’t appear to be adequately thought through given their assertion that a relatively small number of farms will be affected. That is not our experience of the value of land in the agricultural sector. This is another reason for hardworking farmers to wonder why they should carry on," he added.

Hunters, which is based in Lincoln's Inn, operating at the heart of legal London, provides a range of services to individuals, businesses, trusts, landed estates and charities who expect a high level of personal service and expertise.

Both the Country Landowners Association (CLA) and National Farmers Union (NFU) have also launched petitions to allow those who disagree with the changes to share their opinion with Reeves. NFU president Tom Bradshaw described it as a disastrous budget for family farmers, especially tenant farmers.

Reeves said that three-quarters of farms would be unaffected by the reduction in IHT reliefs, but the CLA said it would impact 70,000 farms. "Farmers I know that you have been shafted. But please don't despair. Just look after yourselves for five short years and this show will be gone," Jeremy Clarkson, farmer, journalist and TV presenter, said.