Inheritance tax reliefs – another attack?

Inheritance tax reliefs – another attack?

Friday, 08 November 2019

Amidst all the furore surrounding Brexit and the consequences for agriculture and owners of farmland, it’s easy to concentrate on the day-to-day news whilst overlooking some of the reports that don’t immediately hit the headlines, such as inheritance tax reliefs.

In June, the lobbying organisation “Tax Justice UK” published a report entitled ‘In Stark Relief – How Inheritance Tax Breaks Favour the Well-off.’ Its main findings are that 495 families were able to claim business or agricultural property tax reliefs worth some £668m in 2015/6.

Whilst the publishers of the report claim to be politically non-aligned, the comparisons that are made between the cost of the tax relief, the cost of nurses’ pay, and the cross referencing to surveys by the left-leaning Fabian Society cast some doubt on that assertion.

There is one major logic flaw in the findings which state that:

“The special tax treatments for agricultural and business property are often justified as a means of protecting small family farms and businesses but the reality is different…in 2017 just 40% of agricultural land was purchased by farmers, down from over 60% in 2011, while investors have flocked to buy agricultural land and property.”

This figure was based on the experience of a single high-end land agent and is unlikely to be representative of the market as a whole. Not least because it will not include the many private deals made between neighbouring farmers, which don’t pass through land agents at all, nor the very many smaller transactions arranged by local agents. It also implies that the value of transactions in one year is in some way representative of the distribution of land as a whole. Since only about 2% of agricultural land changes hands each year, this contention is erroneous.

Finally, and looking at the statistics within the report, almost half the agricultural tax relief is given to estates between £1m and £2.5m. If this were to be agricultural property, these will be farms of 100-300 acres. Even in the highest tier of estates, the median value is £4m, which implies a farm of about 500 acres. Mentioning these types of family farms in the same context as “ultra-rich tycoons like James Dyson” or “Deeply unequal land ownership in the UK” could be rather misleading.

Nonetheless, much as the report is open to criticism, and whilst one might query its alleged impartiality, it’s in the public domain and will undoubtedly be cited by some as independent findings whose recommendations should be adopted. Numbers can be quoted and requoted, in or out of context – and the headline of ‘tax breaks favour the well-off’ is one that will not go away.

With parliament otherwise preoccupied, and a general election looming, those wishing to take advantage of the current capital tax regime could do well to move sooner rather than later.

If you have any concerns or think that any of these changes might affect you, then please contact our specialist agriculture tax team. Call 0330 024 0888 or email

Originally written by David Missen on behalf of MHA Carpenter Box.

Bruce Masson


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