Business Relief and Agricultural Property Relief (APR) are long-standing components of the tax regime. Without them, many businesses, including farms and family businesses, would cease to exist or would be broken up on the passing of their owner. They are critical to business planning and succession planning.
When in Opposition, the Secretary of State for Environment, Food and Rural Affairs stated that the then Opposition had no plans to change Inheritance Tax, including APR. However, at Autumn Budget, the Government announced that, while there would continue to be no Inheritance Tax on combined business and agricultural assets worth less than £1 million, above that there would be a 50 per cent relief, at an effective rate of 20 per cent, from April 2026.
Many farms would simply not survive the imposition of Inheritance Tax. Families who have farmed the land for generations could be forced to give up their businesses, their farms, and their homes, which could jeopardise the sustainability of the rural economy, as well as undermining efforts towards greater self-sufficiency in food production and compromising environmental goals.
Inheritance Tax is a tax on the estate of someone who has died, including all property, possessions, and money. The standard Inheritance Tax rate is 40 per cent. It is only charged on the part of your estate that is above the tax-free threshold, which is currently £325,000. This is known as the nil rate band.
Andrew is aware that, at Autumn Budget, the Chancellor set out plans to bring unused pension funds and death benefits from a pension into a person's estate and alter Agricultural Property Relief and Business Property Relief.
He is also deeply concerned about the impact of these reforms, particularly on farms. Many farms would simply not survive the imposition of Inheritance Tax. Families who have farmed the land for generations could be forced to give up their businesses and their homes, jeopardising the sustainability of the rural economy and food security.
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