Katie Martin and Louise Garrett examine rural backlash to IHT reforms in Business and Accountancy Daily
Katie and Louise’s article was published in Business & Accountancy Daily, 20 May 2025, and can be seen here.
Katie Martin, Senior Associate, and Louise Garrett, Associate in our Private Client department, explore the implications of the UK government’s proposed inheritance tax (IHT) reforms on trusts, particularly in the context of agricultural and business property reliefs (APR and BPR).
The reforms, which aim to curb perceived abuses of IHT reliefs, have sparked concern among rural communities and estate planners. While the government maintains that most farms will remain unaffected, critics argue that the £1 million APR/BPR allowance threshold is too low and fails to reflect the true value of agricultural assets, especially when farms are not jointly owned or are passed to non-direct descendants.
The article highlights the complexities introduced by the reforms, especially for trusts. Relevant property trusts will be subject to a £1 million APR/BPR allowance, applied chronologically across trusts created by the same settlor. However, it remains unclear how this allowance will be divided among multiple trusts, raising concerns about increased administrative burdens and potential forced asset sales to meet periodic charges. The reforms also introduce uncertainty around how exit and 10-year anniversary charges will be calculated, particularly for trusts established before the changes take effect in April 2026.
Special trust structures, such as qualifying interest in possession (QIIP) trusts and age 18–25 trusts for bereaved young people, are also affected. In QIIP trusts, the £1 million allowance will be split between the trust and the life tenant’s estate, while young beneficiaries of bereaved minor trusts will each receive their own allowance.
Katie and Louise advise that families and advisors act with caution and consider proactive estate planning to mitigate the impact of these reforms, especially given the lack of clarity in several key areas of the proposed legislation.
Read the full article on the Business & Accountancy Daily website [subscription required].