The Tenant Farmers Association (TFA) can confirm that it has been invited to attend a meeting with the Exchequer Secretary to the Treasury and Tax Minister, James Murray MP, to discuss the proposed changes to Agricultural and Business Property Relief (APR/BPR) from Inheritance Tax. The meeting will take place on Tuesday, 18 February and will be the second time the TFA has had a meeting with the Minister since the October Budget. The TFA’s Chief Executive, George Dunn, will represent the TFA.

The meeting follows the important debate held in Westminster Hall on Monday 10 February, when over 40 MPs, including some backbench Labour MPs, raised concerns about the Government’s proposals and argued for change.

The TFA understands the Government's desire to ensure that cash rich individuals are not able to use the purchase of agricultural land as a way of hiding their wealth from tax whilst, at the same time, looking for mechanisms that make an important contribution to the revenue available to the Government to fund frontline services with mechanisms which protect small, hard-working farm families. However, the TFA believes that what has been announced achieves neither of those objectives.

“I welcome the invitation from the Treasury Minister to meet. I will be seeking to assure him that we are not calling for the Government to U-turn its policy, but we do believe that the policy needs to be finessed. The TFA has called for the forthcoming technical consultation on Trusts to be expanded in scope, to consider some of the wider technical issues that have been subject to discussion since the October 2024 Budget, said Mr Dunn”.

The issues that TFA believes the Government needs to address are as follows:

• What is the correct level of the APR/BPR threshold?

• Would there be merit in allowing the APR/BPR threshold to be transferable between spouses and civil partners?

• How do you deal with the disappearance of the residence nil rate band progressively on estates valued at more than £2 million?

• How do you protect tenanted land on estates that will be valued at levels much higher than any threshold?

• What measures could be put in place to mitigate the impact of the changes on those who are already over retirement age and have held onto assets on the basis of previous tax advice?

“The TFA has provided its own answers to the above questions including: at least doubling the level of the APR/BPR threshold, allowing it to be freely transferable between spouses and civil partners, amending the residence nil rate band rules to ensure that it remains in place for the full level of the threshold, and allowing a shorter period for individuals to put in place Inheritance Tax exempt transfers during their lifetime”, said Mr Dunn.

“In addition to those changes it is vitally important that the Government recognises that it needs to protect hard-working tenant farmers by allowing their landlords to have access to 100% relief from Inheritance Tax where they are letting land under secure agreements or Farm Business Tenancy agreements, let for 10 years or more. This will remove the threat of tenancies being ended and land being sold in order to fund potential taxes on death by these estates,” said Mr Dunn.

More fundamentally, the TFA has asked why the Government has not looked at abolishing or severely curtailing the availability of Capital Gains Tax Business Assets Rollover Relief.

“Targeting rollover relief would be a more sensible proposition than targeting Inheritance Tax. In the first place, there is cash available in the system following a capital disposal whereas cash is not routinely available on an inheritance. This would also fit with the declared objective of the Government of targeting wealthy individuals who are buying agricultural land to avoid tax,” said Mr Dunn.

Indeed, having increased the rate of Capital Gains Tax in the last Budget and removed the ability for unused pension pots to be inherited free of tax, the TFA believes that the Government will have exacerbated the problem it was trying to address. For those with new money acquired through capital gains made in the non-agricultural economy, there will continue to be a huge incentive to buy agricultural land given that the value of that land above the announced threshold will be charged half rate on Inheritance Tax in comparison to other assets.

“The changes announced will drive more new money into the agricultural sector as a tax efficient way to handle capital gains whilst leaving a huge problem for old wealth within the system without access to the cash to settle the need to pay tax on death,” said Mr Dunn.