After huge industry pressure, the government announced before Christmas that it was making changes to its previously proposed Inheritance Tax reforms. The first concession came in the November Budget when it was announced that the £1m relief band would be transferable between spouses. Following this, they announced that the full relief band would be raised to £2.5m. In effect, someone widowed before April 2026 looks to likely to have £5m of full relief now available. Above that the tax rate will remain at 20 per cent.
These changes follow concerns raised after the 2024 Budget reforms, with ministers claiming that their aim is to protect more family farms and trading businesses while ensuring that the largest estates still contribute more.
Farmers and industry bodies such as the NFU, CLA and CAAV have been up in arms about the changes proposed in the 2024 Budget, with those proposals appearing to be ill-advised and potentially catastrophic for family farms. Whilst the Government refused to engage in discussions about the justification for the changes or any potential mitigations, they have finally appeared to take note and softened the potential impact.
