Given the current Labour government has a working majority in Parliament of 169, it is hard to envisage that any major amendments will be made to legislation enacting new inheritance tax arrangements which come into force in April 2026.

The key change for farmers is the new £1m threshold for 100% agricultural and business property relief (APR/BPR) from inheritance tax.

Above that threshold, those agricultural or business assets will qualify for 50% relief, or effectively a tax rate of 20%. There are also other personal allowances, such as the £325,000 nil-rate band to be applied.

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From a NI farming perspective, it would be very helpful if the APR/BPR threshold was scrapped, or as a minimum, increased to over £5m while also being linked to inflation.

Unfortunately, with the current Labour government proving deeply unpopular and stumbling from one crisis to another, there is a reluctance to admit they might have got this policy badly wrong. In essence they have alienated a whole section of rural society for something that will actually raise very little money in return.

Useful

That said, the announcement in last week’s budget whereby the £1m allowance can be transferred between spouses or civil partners is very useful. Without it, many farmers faced a complicated dilemma of developing a succession plan whilst making use of each individual’s £1m tax allowance.

Longer term, a lot of farmers are probably pinning their hopes on a change in government at the next general election in 2029, given that other main parties have said they will reinstate 100% APR / BPR relief.

The problem with that is everything in politics is a trade-off. The Tories or Reform might change the policy, but what might they want to do in return? A comprehensive trade deal with the likes of the US may well be in their sights. The decision by Labour to tinker with inheritance tax will live long in the memory of farmers.