The Tenant Farmers Association (TFA) believes that today’s Budget statement leaves the let sector of agriculture with serious concerns about its future following the changes announced on Inheritance Tax.
As expected, the Chancellor of the Exchequer did decide to increase taxes on agricultural land. Whilst she has announced changes which will apply equally to Agricultural Property Relief (APR) and Business Property Relief (BPR), she has reduced the limit of 100% relief from inheritance tax to £1 million. This will leave many private estates with significant numbers of tenants in a real quandary.
TFA Chief Executive, George Dunn, said “The changes announced to BPR and APR leave us with huge concerns. The reduction to £1 million of the limit on the value of estates that will be tax free on death will inevitably hit large, let estates more heavily than small owner occupiers since they will be more likely to breach the £1 million limit. Having to pay a 20 per cent tax bill on half the value of estates over £1 million of value following every death, will be a major blow to privately owned let estates.
The tax changes to be introduced from April 2026 could lead to a significant amount of land disposals from private estates, as we saw when death duty rates caused the breakup of rural estates in the middle 20th century.
“Such disposals would be immensely damaging to the let sector of agriculture. It is hugely frustrating that the Chancellor did not choose to accept the TFA’s proposal to allow 100% inheritance tax relief to all land let for periods of 10+ years. That would have driven more sustainable farm tenancies, created a secure rural economy and protected traditional let estates, whilst hitting those landlords who continued to take a short-term approach to the management of their land,” said Mr Dunn.
“The £1 million tax-free exemption may help small-owner occupiers, but it will not help small tenant farmers on large estates, particularly those occupying under insecure Farm Business Tenancies. The Chancellor of the Exchequer must think again. We will be writing to the Chancellor to argue that the 2026 legislation must include a provision to exempt land let for 10+ years. Without this provision, we could see the loss of many, small family farms,” said Mr Dunn.
-Ends-
Ref: MR24/13
Date: 30 October 2024
Notes for Editors:
For media enquiries, contact Julia Meadows, TFA Communications and Events Coordinator, on 0118 930 6130 or 07887 777157.
