Just before Christmas the Chancellor, Rachel Reeves, announced that landmark reforms to Inheritance Tax reliefs would be watered down to support the business owners and farmers affected.
While this is a step in the right direction, Weybridge-based accountants MGI Midgley Snelling LLP argue that the principle behind the reforms to Agricultural Property Relief (APR) and Business Property Relief (BPR) remains fundamentally flawed.
Since being introduced in the 2024 Autumn Budget, the cap on relief offered by APR and BPR has caused widespread concern, including condemnation from celebrity farmers like Jeremy Clarkson.
Under the original changes, APR and BPR would only continue to offer 100 per cent relief for amounts up to £1 million, after which the relief would fall to 50 per cent.
There was a slight glimmer of hope in the 2025 Autumn Budget when the Chancellor announced that the allowance could be passed to surviving spouses or civil partners.
Importantly, the relief could be passed along even if a spouse or civil partner died before April 2026.
Now, following significant backlash, the Government has announced a key U-turn: the threshold for APR and BPR will rise to £2.5 million when the changes take effect on 6 April 2026.
Sarah Squires, a Partner at MGI Midgley Snelling LLP, said: “While the increase is welcome, the principle remains flawed.
“Most farms and businesses are asset-rich but cash-poor, so taxing families on death forces families to sell assets they’ve worked hard to preserve. Ideally, tax should only arise when those assets are sold, not when passed on.”
Sarah added that the late timing of the announcement, after a recent Budget, suggests an urgency from the Government to “significant backlash and genuine distress in the farming community”.
There have been a number of reports of farmers considering drastic measures, which highlight how damaging the original policy was.
“The latest change certainly eases the immediate pressure and helps some families keep businesses intact,” added Sarah.
“However, the underlying issue remains succession should not trigger tax where there is no liquidity. While this change is positive, it’s a sticking-plaster solution rather than a fix.”
“Capital-intensive, cash-poor businesses, such as farms, manufacturing, and property-holding companies, will still benefit the most from this change.
“These sectors often have high asset values but limited cash flow, so relief at this level is critical to avoid forced sales.”
The experienced team of advisers at MGI Midgley Snelling LLP is now calling on businesses, including farms, to revisit their succession plans.
“While the higher cap is helpful, it may change the optimal structure for ownership and gifting strategies.
“Reviewing wills, partnership agreements, and trust arrangements is essential to ensure alignment with the new rules.
“Of course, all this leads to more costs on already hard stretched businesses,” explained Sarah.
“Our core message hasn’t changed. Tax planning is only valid at a point in time. With this Government and the next, nothing is certain.
“While the higher cap creates opportunities, flexibility remains key. We’re advising clients to use current reliefs but plan for volatility.”
Whilst MGI Midgley Snelling LLP hopes that this will be the last change to these reliefs, Sarah said: “I would welcome further positive change if it addresses the underlying issue. Tax policy is rarely static, and this Government has shown a willingness, and a need, to change direction under pressure.”
She added: “Don’t assume previous strategies are still optimal. Review your plans now, use the reliefs available, and build flexibility into your structures.
“The principle of taxing succession remains contentious, so expect change and plan accordingly.”
