The Tenant Farmers Association (TFA) has once again called on the Chancellor of the Exchequer, the Rt Hon Rachel Reeves MP, to reform rather than abolish inheritance tax Agricultural Property Relief (APR).

This week, the Chancellor of the Exchequer will deliver the first Labour Government budget in 14 years. Over the four months, since the General Election, she has been gearing us up for a less than palatable menu of budget measures. However, in her determination to be tough, the TFA is calling for her decisions not to be ill judged.

TFA Chief Executive, George Dunn, said "Rumours abound that the Chancellor may decide to abolish APR as part of the process of rebalancing the political scales by taking on the seemingly wealthy having been accused of raiding the wallets of pensioners with the previously announced changes to the winter fuel allowance. However, an ill-judged decision on APR could seriously damage the tenanted sector of agriculture, the most asset poor farming businesses in the country."

On the assumption that the architecture of Business Property Relief (BPR) will remain largely intact, trading owner occupiers of farmland will continue to be able to pass down their land through the generations after death without fear of inheritance tax. However, landlords who cannot access BPR will find other tax havens for their assets including taking land back in hand in an attempt to demonstrate that they are trading in order to switch from APR to BPR. That would effectively kill off the tenanted sector of agriculture coming from privately owned estate land.

"We are already seeing, first hand, concerns about how Inheritance Tax charges change the way that traditional estates are thinking about the management of their agricultural land, and that is before there is any change to the Inheritance Tax regime. If APR was abolished this will make things hugely more difficult for farm tenants," said Mr Dunn.

That is not to say that APR does not require reform. Rather than abolishing it for let land, the TFA believes that it should be available only to those landlords prepared to let for the longest tenancy terms (10 years or more) and all those already letting under secure tenancies regulated by the Agricultural Holdings Act 1986. At the same time, we should be providing those landlords with the opportunity to deem the rental income received in respect of those secure tenancies as trading income, to assist with access to BPR across their wider estate interests. This would deliver more sustainable agricultural tenancies and begin to reverse the trend of insecurity.

It would also be beneficial if landlords had the opportunity to lock in their capital taxation position from the start of any agricultural tenancy for the full duration of the lease.

Some exclusions will need to be introduced for land used for high-value crops, including horticulture, normally farmed in rotation. However, the general rule of supporting longer term tenancies has merit.

"Farming is a long-term endeavour requiring significant capital investment, patience, good soil management and the ability to balance profitable years against the bad. With 80% of all new agricultural tenancies let for five years or less, it is clear we need to nudge the market into providing a greater degree of long-term security. Short-term and restrictive tenancies are holding back progression, investment and sustainable land use. We can change this situation with reform of APR. However, serious damage will be caused if the Chancellor takes a knee-jerk, abolitionist approach," said Mr Dunn.