When Chancellor of the Exchequer Rachel Reeves, aka finance minister, decided in the 2024 Autumn Budget that agricultural and business property business relief would be reformed with assets over £1 million facing a 20 per cent rate, it prompted a storm of protests from farmers in particular. A fear has been that family-run firms will be broken up, as cash-poor/asset-rich owners sell to pay tax bills.

Under Reeves' changes, a 50 per cent relief would have been applied in all circumstances on inheritance tax for shares on the Alternative Investment Market (AIM). The change would take effect from April 2026, and it was expected that it would force more land onto the market in order to meet IHT bills. However, with the change announced this week, just prior to the Christmas holiday season, it offers a measure of relief, although uncertainties remain. Here are some reactions from wealth managers and accountancy firms.

Marc Acheson, global wealth specialist at Utmost Wealth Solutions
“The government’s adjustment belatedly strikes a more pragmatic balance between protecting generational ownership of farms and other business properties with targeting relief where it’s most needed. The £5 million per couple allowance is generous now for farms and business owners in comparison with the looming extension of IHT to pensions on estates in excess of a permanently frozen nil rate band.

“It will be a welcome Christmas present for many farmers – as well as business owners given that this will also apply to Business Property Relief – who have long been fighting the reforms announced at the Autumn 2024 Budget. The question will now move on to whether the government seeks to amend any other inheritance tax reforms. With the Chancellor set to review the impact of the abolition of the non-dom tax status and publish findings next year, it will be interesting to see the real-life impact of this policy in terms of tax returns and receipts.”

Mark Lance, CEO of Moore UK
“The problem with today's concession is that it may have come too late for many UK businesses and farmers. With businesses subject to IHT for the first time in generations, entrepreneurs had been passing on their businesses before they die in order to reduce their IHT bill. It may be too difficult to unwind these transactions. Some of these transactions could backfire, with businesses being passed on to people who are not ready to manage them.

“There is a serious risk that business owners were forced into these transfers by the changes to IHT to the potential detriment of those businesses going forward. The dramatic changes to the IHT rules mean that successors could be taking over businesses before they are ready to take on the responsibility. Consequently, they may lack the life experience, expertise and know-how to manage these organisations effectively. The furore around inheritance tax for business and farm owners since the government first announced changes in Budget 2024 seems to keep rolling on. On 23 December, the government announced yet another change by increasing the nil band for business and farming assets to £2.5m (up from £1m) per person. This is the second major concession since the original proposals and just three months before the new rules come into force from 6 April 2026.”

Paul Townson, a tax partner at BDO
“Many of our business and farming clients have been hugely concerned about the new rules with some having been forced into changing their succession plans already. For some, that effort may now prove to have been unnecessary – assuming that there aren’t even more changes to the proposals before next April. While the increase in the nil band is a sensible move, it’s difficult to understand why these changes have been announced in such an incremental way and within less than a month after the Budget. The stress this whole process will have caused to business owning families should not be underestimated. Once the new rules are finally implemented, the Government should commit to a moratorium on any further tightening of the IHT rules for at least 10 years. Then owners could have some certainty over how they can pass on their business to the next generation.” 

Adam Brewer, senior investment director at Rathbones (Exeter office)
“Generally, this further dilution of the original punch will likely be welcomed by farmers. However, let’s not forget they are still contending with the usual pressures of hefty capital costs and wafer-thin profit margins. Even the eventual £5 million allowance may still fall short of preventing family farms from being broken up, and ongoing political uncertainty only adds to the anxiety. While the higher threshold may feel like a pre-Christmas reprieve, many farmers still face a hefty inheritance tax bill. This change doesn’t remove the need for robust planning. Decisions on land use, business structure, and valuations will ultimately determine the longevity of the family farm. Families should review succession plans now – timely advice can make the difference between relief and regret.”

Robert Salter, director at Blick Rothenberg, an audit, tax and business advisory firm
“The inheritance tax relief threshold rise to £2.5 million announced by the Government is welcome news for farmers and family-owned businesses. This is an early Christmas present for farmers and family-owned businesses and should be welcomed, particularly given that it was generally accepted that no further changes would be made after the November Budget referenced only the ability to transfer the allowance between spouses/civil partners. However, it is disappointing that it has taken the government so long to reach this decision, especially given that the new rules have been heavily criticised by both those impacted and the profession; the new rules have created a lot of stress and angst to those impacted and the increased threshold (and transferable band) goes some way to alleviating that.” 

“It is important that this new threshold is continually reviewed by the government and updated to recognise the impact of inflation on farmers and business owners over the coming years. Otherwise, if the new £2.5 million threshold (£5 million with the ability to transfer) will quickly become out-of-date and simply ‘push the problem’ of IHT on family-owned enterprises down the road, but not remove the issue.”

Phil Kinzett-Evans, partner and head of tax at UHY Hacker Young national accountancy group
“This is a clear last-minute concession from the government – and it only exists because the original proposals caused such widespread alarm among UK farmers and business owners. Raising the APR and BPR threshold from £1 million to £2.5 million, and allowing it to be transferred between spouses, will undoubtedly help some families. But it does not change the fact that people have spent months planning for a much harsher tax regime. During that period of uncertainty, many families made irreversible decisions – selling land, restructuring businesses or accelerating succession plans – because they believed the rules were settled. Announcing such a significant change this late in the process has real consequences. Once a family business or farm is sold, that decision cannot simply be undone.

“The Government now says most estates will be unaffected, but inheritance tax is a relatively small part of the UK’s overall tax take. These reforms did not need to be handled in a way that caused so much distress and forced action. Tax policy should give families the confidence to plan long-term, not push them into rushed decisions based on shifting rules.”

David Lunn, partner at TWM Solicitors
“One point really jumps out from the announcement: the £5 million figure being widely reported only applies if farmers are married or in a civil partnership. If a couple is cohabiting but not married or in a civil partnership, they will still be capped at £2.5 million. While this is an improvement on the £1 million threshold announced previously, it is a significant shift for farmers who have long assumed their APR and BPR assets would be exempt without limit. For those with farm or business assets worth more than £2.5 million, this creates a powerful incentive to consider marrying a long-term partner – something that may not previously have felt necessary where inheritance tax was not seen as a concern under the current rules, due to change in April 2026.”

“From a technical perspective, the government has now significantly widened the relief cap for Business and Agricultural Property Relief. The 100 per cent relief ceiling has increased from £1 million to £2.5 million per individual and, crucially, this allowance remains transferable between spouses and civil partners, allowing couples to pass on up to £5 million of qualifying assets free from inheritance tax. Trusts will also benefit from the same £2.5 million cap per trust, with any excess value above these limits qualifying for 50 per cent relief, as previously proposed.

“These changes follow significant opposition to the original reforms. Industry reaction was swift and strong. A CBI Economics survey for Family Business UK found that nearly a quarter of family businesses, and 17 per cent of family farms, were already cutting jobs or pausing recruitment in response. The National Farmers’ Union described this as a ‘wake-up call’ for ministers, warning of serious cuts to investment if the reforms went ahead unchanged. The decision to raise the APR and BPR thresholds will make a real difference for families with significant agricultural and business assets. Allowing couples to shelter up to £5 million from inheritance tax goes further towards supporting continuity for family farms and businesses, and reduces the risk of forced asset sales simply to meet tax liabilities.”

Claire Trott, head of advice at St James’s Place
“The increase in the 100 per cent inheritance tax relief available on Agricultural and Business Property to £2.5 million should be welcomed, particularly following the 2025 Budget’s move to allow these reliefs to be passed on to a surviving spouse on death. This will be positive Christmas news for business owners and farmers, for whom IHT has been a growing concern since the reductions announced in the 2024 Budget.

“At the same time, further pressure has been added to estate planning through the decision to bring unused pension funds within the scope of inheritance tax from April 2027, alongside the continued freezing of the nil rate band and residence nil rate band. Taken together, these changes have made legacy planning increasingly complex and reinforced the importance of personalised, professional advice. Advice can help people navigate policy changes calmly and sensibly, avoiding hasty or ill-considered decisions. We have already seen many people make unadvised changes to their plans, only to regret them later.”

James Ward, partner and head of private client department at Kingsley Napley
“While many argue that any inheritance tax on farms and businesses is fundamentally unfair, the increase to £5 million per couple will make a huge difference and take many owners out of the inheritance tax net. It is another positive change to this much criticised piece of legislation, after the November Budget announced that the reliefs could be transferred between spouses or civil partners. While today’s change is positive, it will cause issues with the planning already done. A number of farmers have already gifted assets, often in a way which they would rather not have done, and spent significant money on accountancy and legal fees. For instance, gifting assets to the next generation without adequate protection of those assets. Now all that planning is effectively worthless but has led to more complex ownership structures and potential family disagreements.

“Also there is no detail regarding non-farming businesses. Clarification is needed to make sure this relief is across both Agricultural Property Relief and Business Relief. Will it also give trusts the same level of exemption? Effectively it has saved a married couple £600,000 of inheritance tax, if they have qualifying assets above £5 million, as their combined exemption has increased by £3 million and tax is payable at 20 per cent. However, many farms and businesses will still be liable to pay inheritance tax, so the impact of the legislation will still be felt.”