Much has been made of proposed changes to inheritance tax for agricultural property in the recent UK budget. Opponents have focused on the number of f

Changes to farmers’ inheritance tax are fair and could even help them in the long run – expert view

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2024-11-30 20:30:04

Much has been made of proposed changes to inheritance tax for agricultural property in the recent UK budget. Opponents have focused on the number of farms that might be affected, while the government’s arguments focus on the need to raise revenue. There are, however, good reasons to reform a tax break known as agricultural property relief (APR) which may, ultimately, benefit farming communities and the rural economy.

It’s helpful to take a longer view of inheritance tax than other taxes. While most people pay VAT every day, and income tax every month, we only ever pay inheritance tax once, and not even in our own lifetimes. Assets passed down through families might only be subject to inheritance tax every 25–30 years, and the way it’s levied is likely to have changed from generation to generation.

The estate duty that existed for much of the 20th century for the most part provided limited relief for agricultural property. Estate duty was replaced by capital transfer tax in 1975, with marginal tax rates (the rate paid on the highest-value part of the estate) as high as 75%. This was accompanied, however, by a fairly generous relief for agricultural property, conditional upon the inheritor carrying on farming as a trade.

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