Clause 1

Debate between Dan Tomlinson and Julie Minns

Monday 12th January 2026 Commons Chamber

[Dan Tomlinson]

As we come to the final group in today’s Committee stage on the Bill, I am pleased to open this important debate on clause 62, schedule 12 and the many associated amendments. As reiterated throughout the day, the Bill delivers on the choices made at this Government’s two Budgets. It delivers fair and necessary reforms that strengthen the foundations of our economy and provide a secure future for our country. The choice at those two Budgets was austerity and decline or investment and renewal, and on both occasions the Labour Government rejected austerity and chose renewal.

Clause 62, schedule 12 and Government amendments 24 to 29 make changes to agricultural property relief and business property relief in order to target them more fairly, contribute to the sustainability of public finances and fund public services. Under the current system, the 100% relief on business and agricultural assets is heavily skewed towards the wealthiest estates. According to HMRC data for 2021-22, 40% of agricultural property relief across the UK was claimed by just 7% of the estates making claims. That is £219 million in tax relieved from just 117 of the largest estates in the country, and it is a similar picture for business property relief: more than 50% of BPR was claimed by just 4% of the estates making claims. That is a striking £558 million in tax relieved from just 158 estates.

That contributes to the very largest estates paying lower average effective inheritance tax rates than the smaller estates, and significantly lower average effective inheritance tax rates than most people who end up paying IHT will pay. That is the status quo that those seeking to reverse the Government’s reforms in full wish to perpetuate. It is not sustainable and, in the Government’s view, it is certainly not fair to maintain such a large tax break for such a small number of claimants, especially in the context of the wider pressures on the public finances and public services.

[Ms Julie Minns (Carlisle) (Lab)]

I very much welcome the fact that, from next year, an estimated 85% of farms will pay no more inheritance tax on their farming and business assets. I agree with the Minister that it is a proportionate measure that aims to prevent the wealthy from abusing APR, and I know that he is mindful of the profitability of our small and medium-sized farms. Will he undertake to work with colleagues in the Department for Environment, Food and Rural Affairs to make sure that we get the definition right for the new sustainable farming incentive, so that as many of those small and medium-sized farms as possible are eligible for it?

[Dan Tomlinson]

I thank my hon. Friend for her continued interest in this area; she is a strong representative for the rural communities that she represents in the north-west of our country. I am sure that colleagues in DEFRA, including the Secretary of State and others, will be working hard to make sure that the funds that this Government have allocated for farming and farming businesses are spent in full, rather than leaving hundreds of millions of pounds underspent, as the previous Government did. We will make sure that the money gets to the farms that will benefit from it, to support them with the initiatives that they and we know would be good for them to pursue, because they are good for the environment and for those businesses.

Agricultural Property Relief and Business Property Relief

Debate between Dan Tomlinson and Julie Minns

Monday 5th January 2026 Commons Chamber

[Dan Tomlinson]

Yes, we did discuss this at Treasury questions and on Second Reading of the Finance Bill, and we will have time to discuss it in the Committee of the whole House next week too—and I can see from the number of Members wishing to speak now that there are many more questions coming so we may have many more hours today, Mr Speaker, to discuss it as well. In the end, the position that the Government have now reached is that we are going to amend the Finance Bill to make this change and increase the threshold from £1 million to £2.5 million. That will, we expect—and it will be confirmed by the Office for Budget Responsibility in the usual way at fiscal events—raise £300 million, money that we can put into our public services, rather than continue the chaos of previous years with additional borrowing. It is right to look in the round at fair and necessary tax changes that we can make on those with the broadest shoulders, so that we can fund our public services adequately.

[Ms Julie Minns (Carlisle) (Lab)]

Happy new year, Mr Speaker. I pay tribute to Carlisle NFU and my constituents who have raised this issue with me over the last 14 months, and I thank the Minister and his colleagues for engaging constructively and listening to those representations. North Cumbrian farmers face land price increases as a result of forestry firms snapping up large parcels of land and large landowners seeking to abuse the IHT system by hiding their wealth, and this is an important step in balancing the need to tackle that abuse and rising land prices and the need to raise the revenue required for our village schools, local health services and to tackle crime. Does the Minister agree that this now achieves that balance?

[Dan Tomlinson]

I thank my hon. Friend for her question and for her strong representation of rural constituents and rural communities. She makes a very important point. It is worth noting that this is a tax relief, and the tax relief as it stood before the changes that the Government have come forward with since the 2024 Budget meant that the top 7% of claims for agricultural property relief accounted for 40% of the Exchequer cost of the relief. That meant £219 million in foregone tax revenue—revenue that, by and large, this Government will now be raising from the very largest estates to help fund our public services in a sustainable way. The Opposition were never able to do that because of their chaotic management of the economy and the public finances.