Rachel Reeves’ Autumn Budget softens last year’s inheritance tax reforms, but Duncan Mitchell-Innes of TWM Solicitors warns the concession falls far short — leaving many farming families, business owners and co-habiting partners still facing sharply higher IHT exposure.
Comments from Duncan Mitchell-Innes, Deputy Head of Private Client and Partner at TWM Solicitors, a leading private client and family wealth law firm:
“This is an important concession — but let’s not get confused. The wider IHT reforms are going to cause huge problems for farming families and families that own businesses”.
“Transferring the £1m APR/BPR allowance between spouses and civil partners will help some families — but it is regarded as a drop in the ocean by those in the farming industry”.
“Many long-standing family farms and businesses will still face much larger inheritance tax liabilities than before”.
“And crucially, this concession does nothing for co-habiting couples. In many modern farming and business families, partners work side-by-side for decades without marrying or entering a civil partnership. They get no benefit at all under these proposals”.
Rachel Reeves softens her stance on controversial inheritance tax reforms – but is it enough?
In today’s Autumn Budget, Chancellor Rachel Reeves announced a significant concession on inheritance tax rules for agricultural and business assets. From next year, families will be able to transfer the 100% relief allowance between spouses, a move the Treasury says will “balance the taxation of these valuable assets with the realities of family life”.
This adjustment follows widespread backlash against last year’s sweeping reforms to Agricultural Property Relief (APR) and Business Property Relief (BPR), which capped full relief at £1 million per person and imposed stricter eligibility criteria. Those changes sparked outrage among farming families and business owners, who warned that the measures threatened the survival of family enterprises and rural communities.
Industry reaction: A tactical retreat?
Today’s announcement can be seen as a sign that Reeves has recognised the political and practical fallout from her earlier reforms.
The National Farmers’ Union echoed this sentiment, calling the concession “too little, too late” and vowing to continue campaigning for meaningful change. NFU President Tom Bradshaw said: “This is an admission that the policy was flawed from the start. While today’s move will help some families, it does nothing to address the wider damage these reforms have caused.” [farminguk.com]
Political context
The Chancellor’s decision comes amid mounting pressure from rural communities and backbench MPs, who have branded the reforms a “family farm tax.” Protests outside Parliament earlier this year underscored the depth of anger, with critics accusing the government of jeopardising food security and rural livelihoods. [farminguk.com]
What does this mean for families?
Under the revised rules, a surviving spouse will be able to combine their own £1 million APR/BPR allowance with that of their deceased partner, enabling up to £2 million of qualifying assets to pass tax-free on second death. While this eases succession planning for some, the cap and tightened definitions introduced last year remain in force, leaving many estates exposed to 40% inheritance tax on excess value.
It is also worth bearing in mind that, in today’s climate “the realities of family life” do not always include marriage between co-habiting partners. In those cases, the current proposals give no benefit at all.
