Asked by: Lee Pitcher (Labour - Doncaster East and the Isle of Axholme)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, with reference to the report by CenTax entitled A fair solution to inheritance tax on farms and small businesses, published on 15 August 2025, if she will make an assessment of the potential impact of the proposal for a minimum share rule on levels of Inheritance Tax paid by (a) family-run farms and (b) estates holding agricultural land for investment purposes.
Answered by Dan Tomlinson - Exchequer Secretary (HM Treasury)
The Government believes its reforms to agricultural property relief and business property relief from 6 April 2026 get the balance right between supporting farms and businesses, fixing the public finances, and funding public services. The reforms reduce the inheritance tax advantages available to owners of agricultural and business assets, but still mean those assets will be taxed at a much lower effective rate than most other assets. Despite a tough fiscal context, the Government will maintain very significant levels of relief from inheritance tax beyond what is available to others and compared to the position before 1992. Where inheritance tax is due, those liable for a charge can pay any liability on the relevant assets over 10 annual instalments, interest-free.
As announced at Budget 2025, any unused £1 million allowance for the 100% rate of agricultural property relief and business property relief will be transferable between spouses and civil partners, including if the first death was before 6 April 2026.
The report by the independent Centre for the Analysis of Taxation (CenTax) sets out its other potential amendments to the policy are not, in its own words, a “silver bullet”. For example, CenTax acknowledge the proposal for a minimum share test is less effective than the Government’s reforms in raising revenue from the wealthiest estates, could be exposed to tax planning opportunities, would not necessarily prevent wealthy individuals buying land for inheritance tax purposes, and would mean double the number of estates being affected by the reforms (and largely estates below £2 million).
Asked by: Lee Pitcher (Labour - Doncaster East and the Isle of Axholme)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, whether she has made an assessment of the potential implications for her policies of the report by CenTax entitled A fair solution to inheritance tax on farms and small businesses, published on 15 August 2025.
Answered by Dan Tomlinson - Exchequer Secretary (HM Treasury)
The Government believes its reforms to agricultural property relief and business property relief from 6 April 2026 get the balance right between supporting farms and businesses, and fixing the public finances. The reforms reduce the inheritance tax advantages available to owners of agricultural and business assets, but still mean those assets will be taxed at a much lower effective rate than most other assets. Despite a tough fiscal context, the Government will maintain very significant levels of relief from inheritance tax beyond what is available to others and compared to the position before 1992. Where inheritance tax is due, those liable for a charge can pay any liability on the relevant assets over 10 annual instalments, interest-free.
The report by the independent Centre for the Analysis of Taxation (CenTax) supports the Government’s analysis of these reforms, including the number of estates affected in 2026-27, and concludes that half of these estates will see an increase in their effective inheritance tax rate of less than 5 percentage points, and almost 90 per cent of these estates could pay their entire inheritance tax bill out of non-farm assets. In CenTax’s opinion, the Government’s proposed reforms improve on the current position and are expected largely to meet the Government’s objectives.
CenTax did suggest the Government could consider amending the policy to introduce a “minimum share rule” or an upper limit on relief. However, as the report acknowledges, there are challenges with those approaches too and they are not a “silver bullet”, in CenTax’s own words.
The Government will invest more than £2.7 billion a year in sustainable farming and nature recovery from 2026-27 until 2028-29. This includes the largest financial investment into nature-friendly farming ever.