The recent Budget has sparked controversy among farmers as Chancellor Rachel Reeves limited inheritance tax reliefs (IHT) for agriculture. Long-standing benefits, such as 100% agricultural property relief (APR) and business property relief (BPR), will apply only to the first £1m value. Assets above this threshold will receive just 50% relief, resulting in an effective IHT rate of 20%.
This change has alarmed generational farmers, who often work until the end of their lives, unlike other small business owners who may exit their businesses earlier. While small businesses tend to focus on capital gains tax (CGT) reforms, they should also take inheritance tax (IHT) implications into account.
Organisations such as the National Farmers Union (NFU), the Country Land and Business Association (CLA), and the Tenant Farmers Association (TFA) have expressed criticism. They warn that these reforms could dismantle family farms and hinder the UK’s ability to meet food production and environmental goals.
The Government’s refusal to reconsider or mitigate these changes has spurred a significant backlash. Protests are being organised, with a major march on Parliament planned for 19 November.
While the focus has been on farmers, the full impact on small businesses remains to be seen. However, these reforms couldhave far-reaching consequences for many family-run enterprises.
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