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.
