Question to the HM Treasury:

To ask the Chancellor of the Exchequer, what analysis her Department has conducted on the projected fiscal impact of the proposed cap on Business Property Relief; and if she will publish the modelling assumptions used to calculate the anticipated revenue gain.

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 analysis undertaken by CBI Economics was commissioned by Family Business UK and is based on a self-selecting online survey from members of representative groups campaigning against the reforms. The independent Office for Budget Responsibility (OBR) certified the costing at Autumn Budget 2024 as ‘reasonable and central’. The reforms to agricultural property relief and business property relief are forecast to raise a combined £520 million in 2029-30. The OBR does not expect the reforms to have a significant macroeconomic impact.

The OBR published information about the costing in the Economic and Fiscal Outlook on 30 October 2024. The OBR published more detail on the costings on 22 January 2025. This material is all available on the OBR’s website.

Information from claims is not recorded in a manner to enable regional or national breakdowns of the number of estates expected to be affected. However, the reforms are expected to result in up to 520 estates claiming agricultural property relief, including those also claiming business property relief, paying more inheritance tax in 2026-27. Almost three-quarters of estates claiming agricultural property relief, including those that also claim for business property relief, will not pay any more tax as a result of the changes in 2026-27, based on the latest available data.

The Government has also set out that around 1,500 estates across the UK only claiming business property relief are expected to pay more inheritance tax in 2026-27, with around 1,000 of these expected to only hold shares designated as “not listed” on the markets of recognised stock exchanges, such as the Alternative Investment Market. Around three-quarters of estates claiming business property relief in 2026-27 (excluding those estates only holding shares designated as “not listed”) will not pay any more inheritance tax in 2026-27.

The rules relating to valuation at death are long-standing and well-established in legislation, including for business property, and guidance is available. More information is available at www.gov.uk/hmrc-internal-manuals/inheritance-tax-manual/ihtm09701 and in the section on valuation in the guide to completing inheritance tax accounts at www.gov.uk/government/publications/inheritance-tax-inheritance-tax-account-iht400.