Lord Houchen of High Leven

The reforms to agricultural property relief and business property relief are forecast to raise a combined £520 million in 2029-30. The independent Office for Budget Responsibility (OBR) certified this costing at Autumn Budget 2024 and it does not expect the reforms to have a significant macroeconomic impact. In accordance with standard practice, a tax information and impact note will be published alongside the draft legislation before the relevant Finance Bill.

Information from claims is not recorded to enable regional breakdowns of the number of estates expected to be affected. However, the Government has set out that around 1,500 estates across the UK only claiming business property relief are expected to be affected in 2026-27, with around 1,000 of these expected to only hold shares designated as “not listed” on the markets of recognised stock exchanges, such as the Alternative Investment Market. The remaining 500 estates will include business assets from sectors across the economy that are eligible for business property relief. These reforms mean that around three-quarters of estates claiming business property relief in 2026-27 (excluding those only relating to holding shares designated as “not listed”) will not pay any more inheritance tax in 2026-27.

The reforms to agricultural property relief and business property relief are forecast to raise a combined £520 million in 2029-30. The independent Office for Budget Responsibility (OBR) certified this costing at Autumn Budget 2024 and it does not expect the reforms to have a significant macroeconomic impact. In accordance with standard practice, a tax information and impact note will be published alongside the draft legislation before the relevant Finance Bill.

Information from claims is not recorded to enable regional breakdowns of the number of estates expected to be affected. However, the Government has set out that around 1,500 estates across the UK only claiming business property relief are expected to be affected in 2026-27, with around 1,000 of these expected to only hold shares designated as “not listed” on the markets of recognised stock exchanges, such as the Alternative Investment Market. The remaining 500 estates will include business assets from sectors across the economy that are eligible for business property relief. These reforms mean that around three-quarters of estates claiming business property relief in 2026-27 (excluding those only relating to holding shares designated as “not listed”) will not pay any more inheritance tax in 2026-27.

The Government’s reforms to agricultural property relief and business property relief from 6 April 2026 achieve the right balance between supporting farms and fixing the public finances in a fair way. The reforms reduce the inheritance tax advantages available to owners of agricultural and business assets, but still mean those assets will be taxed at a much lower effective rate than most other assets. Despite a tough fiscal context, the Government will maintain very significant levels of relief from inheritance tax beyond what is available to others and compared to the position before 1992.

These reforms are being introduced in a broader context of significant existing support for the farming industry in the wider tax system, which the Government is maintaining. The existing rules already provide considerable support for the agricultural sector beyond the general support for businesses. This includes the exemption from business rates for agricultural land and buildings, the ongoing entitlement for vehicles and machinery used in agriculture to use rebated diesel and biofuels, and the exemption from the plastic packaging tax for the plastic film used by farmers to produce silage bales. Furthermore, farmers are able to claim to add together their profits from farming for two years or five years and be taxable on the average of those profits.

The Government’s commitment to farmers and the vital role they play in feeding our nation remains steadfast. The Government’s decisions at Autumn Budget 2024 provide £5 billion over two years for farming and land management in England which will restore stability and confidence in the sector, strengthening food security alongside nature’s recovery. This is the largest ever budget directed at sustainable food production and nature’s recovery in our country’s history. Despite the difficult fiscal inheritance, funding has also been prioritised for the Farm Recovery Fund to support farmers with the impact of severe wet weather over the last year.

The Government’s reforms to agricultural property relief and business property relief from 6 April 2026 achieve the right balance between supporting businesses, including farms, and fixing the public finances in a fair way. The reforms reduce the inheritance tax advantages available to owners of agricultural and business assets, but still mean those assets will be taxed at a much lower effective rate than most other assets. Despite a tough fiscal context, the Government will maintain very significant levels of relief from inheritance tax beyond what is available to others and compared to the position before 1992.

A technical consultation will be published shortly. As set out at Autumn Budget 2024, the focus of the consultation will be on the detailed application of the £1m allowance to lifetime transfers into trusts and charges on trust property. This will inform the legislation to be included in a future Finance Bill and the Government welcomes engagement on this technical issue. There are no plans to expand the scope of the consultation.

The Government’s reforms to agricultural property relief and business property relief from 6 April 2026 achieve the right balance between supporting businesses, including farms, and fixing the public finances in a fair way. The reforms reduce the inheritance tax advantages available to owners of agricultural and business assets, but still mean those assets will be taxed at a much lower effective rate than most other assets. Despite a tough fiscal context, the Government will maintain very significant levels of relief from inheritance tax beyond what is available to others and compared to the position before 1992.

A technical consultation will be published shortly. As set out at Autumn Budget 2024, the focus of the consultation will be on the detailed application of the £1m allowance to lifetime transfers into trusts and charges on trust property. This will inform the legislation to be included in a future Finance Bill and the Government welcomes engagement on this technical issue. There are no plans to expand the scope of the consultation.