The Government has reversed plans to impose inheritance tax (IHT) on farms worth in excess of \u00a31 million.<\/p>\n
The level of the Agricultural and Business Property Relief threshold will now be set at \u00a32.5 million for individuals or up \u00a35 million for married couples when it becomes law in April this year.\u00a0\u00a0Above this threshold, 50% relief (effective IHT rate of 20%) will still apply to qualifying assets.\u00a0\u00a0The Government asserts that it will continue to impose IHT liabilities on these assets above this level to prevent investors from owning such businesses simply to avoid paying IHT.<\/p>\n
Environment Secretary Emma Reynolds commented: \u201cFarmers are at the heart of our food security and environmental stewardship, and I am determined to work with them to secure a profitable future for British farming. \u00a0We have listened closely to farmers across the country and we are making changes to protect more ordinary family farms. We are increasing the individual threshold from \u00a31m to \u00a32.5m which means couples with estates of up to \u00a35m will now pay no inheritance tax on their estates.”<\/p>\n
She stipulates, \u201cIt\u2019s only right that larger estates contribute more, while we back the farms and trading businesses that are the backbone of Britain\u2019s rural communities.\u201d<\/p>\n
The Government says that the new rules for sharing allowances between spouses will count for those who have been widowed, lost spouses or civil partners before the policy was introduced.<\/p>\n
The rules were initially announced in the 2024 Autumn Budget. The plans laid out were set to charge a 20% tax on all inherited agricultural assets over \u00a31 million, ending a relief that had been in place since the 1980s.<\/p>\n
Government projections suggest the tweaks to the rules will mean some 1,100 estates rather than the initially projected 2,000 will now be liable to the tax charges from April 2026.\u00a0\u00a0Such rules changes make for significant uncertainty around inheritance tax \u2013 one of the more complicated of the UK\u2019s wealth taxes.<\/p>\n
It is essential \u2013 whether agricultural property relief is relevant to your financial plans or not \u2013 that you ensure that your estate is prepared for any and all IHT liabilities.\u00a0 If you are unsure about this or would like to speak about the topic in general, don\u2019t hesitate to get in touch.<\/p>\n","protected":false},"excerpt":{"rendered":"
The Government has reversed plans to impose inheritance tax (IHT) on farms worth in excess of \u00a31 million. The level of the Agricultural and Business Property Relief threshold will now be set at \u00a32.5 million for individuals or up \u00a35 million for married couples when it becomes law in April this year.\u00a0\u00a0Above this threshold, 50% relief (effective IHT rate of 20%) will still apply to qualifying assets.\u00a0\u00a0The Government asserts…<\/p>\n