Agricultural Property Relief

Debate between Torsten Bell and Robbie Moore

Tuesday 28th January 2025 Westminster Hall

[Torsten Bell]

I will make some progress.

In 2026-27, up to 520 estates claiming agricultural property relief, including those that also claim business property relief, are expected to pay more as a result of this change. That means that around three quarters of estates claiming agricultural property relief will not pay any more than they do now.

The hon. Member for Keighley and Ilkley and the right hon. Member for Orkney and Shetland (Mr Carmichael) asked questions about business property relief and specifically about claims that are not covered by agricultural property relief. Around three quarters of estates claiming business property relief alone—that is, the same proportion that have agricultural property relief, once we exclude those only holding alternative investment market or AIM shares, which are often held for the purpose of avoiding inheritance tax—will not pay any more inheritance tax in 2026-27. All estates making claims for these reliefs will continue to receive generous support, at a total cost of £1.1 billion to the Exchequer. The system will remain more generous than it was before 1992, when inheritance tax was applied at a maximum rate of 50%, including on the first £1 million that was passed on.

Several Members have implied that the change will end the passing-down of farms between generations. I gently point out in response that farmers, agricultural landowners and small business owners did not receive 100% relief on inheritance tax for almost all of the 20th century, yet farms and businesses were very much passed down between generations. Indeed, the tax system will continue to support that process. As the Institute of Fiscal Studies has said, our reforms will:

“still leave…land much more lightly taxed than most other assets”.

These changes should also be seen in the wider context of support we are providing for farmers and rural communities. The hon. Member for Aberdeenshire North and Moray East (Seamus Logan) was wrong in his comments about the Office for Budget Responsibility, as the document produced this week provides no new information. However, he was right about the importance of food security, as was the hon. Member for Great Yarmouth (Rupert Lowe). That is why the Budget committed £5 billion to farming over the next two years, including the biggest budget for sustainable food production in our history. It also committed £60 million to help farmers affected by the unprecedented wet weather last winter. The wider tax system will also continue to support farming—tenants as well as owners—including through exemptions from business rates, the use of rebated diesel and the ability, as I said, to average tax affairs over a number of years.

As we have heard today, the reforms to inheritance tax generate strong views. I understand that. I recognise that a small number of estates will have to pay more. I have not hidden from that today, nor in conversations—

[Robbie Moore]

Will the Minister confirm when he and the Government will start listening to the points being made by everybody outside this place—different stakeholders, banks, accountants—

[Robbie Moore]

And supermarkets. The Minister and Government are, dare I say it, alone on this point.

Secondly, as he did not allow my intervention earlier, will the Minister confirm why the Government are not taking into account the value and the size of agricultural units when projecting the impact the changes will have on family farming businesses and farming businesses?

[Torsten Bell]

The hon. Gentleman raises the question of supermarkets. Supermarkets can talk but there is a lot they could do directly to support our farmers—

[Robbie Moore]

You are not listening to the question.

--- Later in debate ---

[Torsten Bell]

I listened to the question and I will make more progress. I have not hidden from what I have heard from individuals across the country about this issue in recent months, including from talking to farmers in mid-Wales and East Anglia. Reform of the reliefs is necessary if we are serious about putting our public finances on a stable footing and repairing our broken public services, including the schools, hospitals and roads that communities across the UK—

[Robbie Moore]

Will the Minister give way?

[Torsten Bell]

No, I am going to finish. Communities across the UK, including in rural areas, rely on those things every single day. We have taken these decisions to make the system fairer and more sustainable and the decisions come alongside significant new investments in farming and support for small business.

Thank you, Mr Stringer, and all those who have spoken today, in particular the hon. Member for Caerfyrddin for securing the debate. I look forward to her concluding remarks.