The Tenant Farmers Association (TFA) has welcomed a report from the cross-Party Environment Food and Rural Affairs Committee of the House of Commons highlighting the need for the Government to reflect on the impact of the changes it is making to Inheritance Tax on tenant farmers.

Following evidence provided to the Select Committee by the TFA, its report has called on the Government to consult to “prevent negative impacts on tenant farmers” arguing that the introduction of the tax changes should be delayed for a period of 12 months.

TFA Chief Executive, George Dunn, said “The TFA is grateful to the Select Committee for listening to and taking on board the evidence we provided about the impact of the ill thought through changes to Inheritance Tax announced by the Chancellor of the Exchequer in her October 2024 Budget. It is tremendously powerful that this report comes from a group of cross-Party MPs which indicates that these issues of concern transcend Party politics.”

“It is abundantly clear to anyone who has scrutinised the Inheritance Tax policy of the Government that it is not fit for purpose. The policy must be finessed before it is introduced and we have proposed a number of ways that this can be achieved. We understand the stated objectives of the Government both to raise tax revenue and ensure that wealthy individuals are not hiding their wealth inappropriately from tax, however the Government cannot be blind to the irreparable damage it will cause to the farming industry if it presses ahead with its current plan,” said Mr Dunn.

“The TFA has proposed a number of ways that the Government could finesse the policy to achieve its objectives whilst mitigating against the negative, unintended consequences of its current approach,” said Mr Dunn.

The constructive and proportionate ideas that have been provided by the TFA are as follows:
* Doubling the Inheritance Tax zero-rate threshold for Agricultural and Business Property Relief (APR and BPR) to £2 million.
* Allowing the Inheritance Tax zero-rate threshold to be transferable between spouses and civil partners.
* Providing a shorter timescale for very elderly and terminally ill individuals to pass down their business assets to the next generation without incurring tax.
* Giving landlords letting land to tenants on secure agricultural tenancies and on Farm Business Tenancies let for 10 years or more, the opportunity to include the value of that land within their zero-rate band for inheritance tax.
* Amending the rules which see the Inheritance Tax residence nil rate band begin to diminish for estates beyond £2 million in value.
* Abolishing or significantly curtailing Capital Gains Tax business assets rollover relief which allows wealthy individuals to avoid tax when purchasing agricultural land.

“We note that the Select Committee has called on the Government to delay the implementation of any tax changes for a year to allow for consultation on measures to mitigate negative consequences. Given the considerable debate there has been already, there is still time for the government to make these changes to be brought in as part of this year’s legislative programme. However, if the Government feels it needs more time to consider the solutions proposed, as suggested by the EFRA Committee, then the TFA would be prepared to work with the Government. Nevertheless, it is vital any additional time must be used constructively. There must be significant improvement in the level of engagement on this issue between the Government and the Industry. We do not want to see our legitimate concerns simply put into the long grass with no dialogue and no change in the policy occurring,” said Mr Dunn.