Matthew Yates explores the impact of new IHT reforms on UK farmers in IFA Magazine
Matthew’s article was published in IFA Magazine, 18 December 2024, and can be seen here.
Matthew Yates, Partner and joint head of Hunters’ Private Client department, explores the UK government plans to impose inheritance tax (IHT) on farmers, capping inheritance tax relief for agricultural assets.
This change, announced by Chancellor Rachel Reeves, will introduce a combined upper limit of £1 million for Agricultural Property Relief (APR) and Business Property Relief (BPR) starting from April 2026. Assets above this threshold will be subject to a 20% effective tax rate.
Inheritance tax changes for farmers – How can they prepare?
The government’s plan to impose inheritance tax (IHT) on farmers has made big headlines. On 30th October, Labour Chancellor Rachel Reeves announced in her first Budget that the government would introduce a cap on inheritance tax relief for agricultural assets.
Farmers have received special treatment in relation to IHT from successive governments. Agricultural Property Relief (APR) and Business Property Relief (BPR) have ensured the survival of family and farming businesses after the owner’s death. This year’s Budget introduced changes to APR and BPR specifically in relation to farms and businesses, announcing cuts to the aggregate value of both reliefs.
In practice, a combined upper limit of £1 million for APR and BPR will make farmers with assets worth more than that figure liable to pay IHT from 6th April 2026. Anything above the £1 million threshold that does not pass to a surviving spouse or civil partner will become subject to an effective tax rate of 20% because under the proposed changes, only 50% of the surplus value will qualify for full exemption. Any IHT that is due can be paid over a ten-year period. Although no interest is charged while instalments are being paid, that provides little comfort.
Read the full article here: Inheritance tax changes for farmers – How can they prepare? (IFA Magazine)
