IHT Agricultural Property and Business Property Reliefs: An update

The recently released Spring Statement did not include any suggestion that that proposals contained in the Autumn Budget will be changed and in fact the ongoing consultation on trusts, open until 23rd April 2025, appears to be predicated on the basis that the changes to the reliefs will be introduced as announced.

The consultation document contains useful further detail but is something of a mixture of both positive and negative proposals. The key ones can be summarised as follows:

• An individual’s £1m 100% relief band will refresh every seven years, so it is not a lifetime allowance
• Distributions of qualifying property from a discretionary trust between 5 April 2026 and the trust’s next ten-year anniversary date can still benefit from 100% relief on an unlimited amount if the trust was set up prior to 30 October 2024
• A change in the way that exit charges are calculated after a ten-year anniversary will mean that a higher rate of tax might apply compared with that under current rules
• The basis of valuation where share ownership is split between multiple trusts set up by the same settlor will change so that they are valued together
• The new £1m relief band will be divided between trusts set up by the same settlor after 29 October and allocated in chronological order
• The consultation confirms that any unused £1m 100% relief band will not be transferable between spouses/civil partners

As can be seen, some of the proposals are to be welcomed but others are not, and these will increase rather than reduce complexity.

We continue to make the case for change but there is no suggestion at the moment that the Government will row back in any meaningful way. Rather the dye seems cast.

We continue to monitor developments and remain available to discuss how these proposals might affect you and your family.

If you wish to discuss this in further detail, please get in touch with one of Farms and Estates team members.