Question to the HM Treasury:

To ask His Majesty's Government whether they are reconsidering removing business property relief for inheritance tax following research from CBI Economics that suggests it will result in a net loss rather than gain to the economy.

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 Government is not removing either agricultural property relief or business property relief. 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.

The Government has set out that the reforms are expected to result in up to 520 estates claiming agricultural property relief, including those that also claim business property relief, in 2026-27 paying more inheritance tax. This means almost three-quarters of estates claiming agricultural property relief, including those that also claim for business property relief, would not pay any more tax as a result of the changes in 2026-27, based on the latest available data.

The Government has also set out that around 1,500 estates 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. The OBR published information about the costing in the Economic and Fiscal Outlook on 30 October 2024. The OBR recently published more detail on the costings on 22 January 2025. This material is all available on the OBR’s website.