Agricultural and Business Property Reliefs: OBR Costing

Baroness Kramer Excerpts

Monday 27th January 2025 Lords Chamber

[The Financial Secretary to the Treasury (Lord Livermore) (Lab)]

My Lords, I am grateful to the noble Baroness for her question. I do, however, totally dispute her characterisation of this policy. At the Budget, we had to take some very difficult decisions on welfare spending and tax that were necessary to fix the public finances and support our public services. We had to do that to address the mess that we inherited from the previous Government. We took those decisions in a way that makes the tax system fairer and more sustainable.

As a result of the measures we are taking, individuals will continue to be able to claim 100% relief for the first £1 million of combined business and agricultural assets, and 50% thereafter. Given the nil-rate bands, that means a couple can pass on up to £3 million between them to a direct descendant inheritance tax-free. In answer to the noble Baroness’s question, the measures will go ahead as planned.

[Baroness Kramer (LD)]

My Lords, my colleagues on these Benches have made it clear that we oppose this tax change; we are concerned about the impact of it on family farms and the rural economy, and the knock-on effect on food pricing and food security. We have proposed alternative taxes in lieu. However, in the spirit of compromise, I propose that the Minister looks at lifting the individual thresholds for inheritance tax and agricultural property to £3 million. It would provide great relief for the genuine small farms and would still capture those who are seeking to use investment in farm property as a loophole for tax avoidance. Frankly, having seen the OBR numbers, it would be a very little loss to the Exchequer.