Any inheritance tax win will be boring

The controversial changes to inheritance tax which were announced in October 2024 led to a series of protests by farmers across the UK.

At the time, many farmers were hoping the public demonstrations would lead to a screeching U-turn by the UK government.

But with Labour having a huge majority in Parliament and a small voter base in rural areas, that was always an unlikely outcome.

Instead, the government has not moved an inch from its original plan for reforming agricultural property relief (APR) and business property relief (BPR) for inheritance tax.

In fact, the latest fear is that it might go further and tighten capital gain tax rules which could see a tax raid on properties that are transferred during a person’s lifetime.

The campaign to stop the so-called “family farm tax” seemed to be going nowhere until mid-August when a London-based think tank published a report on the new inheritance tax plan.

The report by CenTax has reopened the debate in certain circles as it contained three proposals that try to limit the impact of inheritance tax on family farms.

The first two proposals aim to make it more difficult for non-farming landowners and those who have very large farms (worth over £10m) to get relief on inheritance tax.

In effect, these people would pay more tax under CenTax’s proposals, so it could allow more generous tax relief for smaller farms, whilst not impacting on overall tax intake.

Helpful proposal

The third proposal is to bring APR and BPR in line with other inheritance tax reliefs by allowing unused allowances to be transferred between spouses. This would be helpful for many farming families.

It is all fairly complicated and boring stuff. Although that is the nature of taxation after all. No disrespect to any accountants out there.

Being realistic, the battle to change the inheritance tax policy was never going to be won by disruptive farmer protests.

It is in the nitty gritty detail of dull tax policy where a win for farmers will be found. That’s where we seem to be right now. Let’s hope the UK government joins us.