MPs criticise inheritance tax reform for farmers

A fairly damning cross-party House of Commons report was published on 16 May calling for a pause in the implementation of reforms to agricultural and business property relief. The report is the first review of the Government's long-term vision for farming and is critical of certain policy announcements (i.e. on APR, BPR and SFI) that have caused confusion and anxiety in the farming world, and appear disjointed from a long-term strategic vision for this sector.

The committee is concerned that there was no consultation, impact or affordability assessment before the inheritance tax announcements at the budget, while the statistics on which the tax reforms are predicated remain disputed. The report concludes that a "lack of proper evaluation of the impact of these changes means that the scale and nature of its impact on family farms, land values, tenant farmers, food security and farmers in the devolved administrations is disputed and unclear and comes with a considerable risk of negative unintended consequences. As such, the reforms threaten to affect the most vulnerable, including those who are older or are farming less profitable or tenanted holdings. The real concerns of farmers are demonstrated in recent data on farmer confidence and mental health." The committee recommends that the Government should:

• "delay announcing its final APR and BPR reforms until October 2026, to come into effect in April 2027 [rather than April 2026], to provide more time for farming businesses to conduct succession planning and seek appropriate professional advice" and 
• "publish its evaluation of and rationale for following or not following alternative policy measures presented by stakeholders such as the Institute for Fiscal Studies and the National Farmers Union."

It is not clear what impact this report will have and whether these recommendations will be followed (or will extend to relief for businesses other than farming), but anyone affected by the proposed changes should be aware of this development. A public consultation on the inheritance tax changes closed on 23 April and we await the Government's response and next steps.