Could we see a potential delay to IHT reforms?

The reforms to Agricultural Property Relief (APR) and Business Property Relief (BPR) announced in the October 2024 Autumn Budget are proposed to come into effect from April 2026. The government has faced continued high profile lobbying to amend the proposals. So far, they have resisted, and it seems the road from full relief to only half is set.

There is renewed pressure from within government to at least delay when the changes take effect until April 2027. This article briefly looks at where we are now with the future reforms and a reminder to carefully consider wider factors in succession planning, over and above just tax efficiency.

In mid-May’25, The Environment, Food and Rural Affairs (EFRA) Committee published

its first inquiry report into the future of farming. The role of EFRA is to examine the expenditure, administration, and policy of the Department for Environment, Food and Rural Affairs (DEFRA) and its associated public bodies. It is a cross-political House of Commons committee, chaired by Alistair Carmicheal, MP Liberal Democrats.

In May’25 EFRA reiterated its previous concerns that no wide consultation, impact assessment or affordability assessment was conducted before the announcement of the reforms. Therefore the scale and nature of the IHT changes impact on family farms, land values, tenant farmers, food security and farmers in the devolved administrations is disputed and unclear.

The EFRA report recommended, “A pause in the implementation of the reforms would allow for better tax policy to be developed and the Government to convey a positive long-term vision. The Government should delay announcing its final APR and BPR reforms until October 2026, to come into effect in April 2027. This would also provide farmers with more time to seek appropriate professional advice.” The government response to the report is expected 16th July 2025, after this article is written.

The EFRA report follows the February 2025 HMRC consultation into the application of the new rules and how they will apply to trusts. That consultation was a second stage document, having skipped the first stage which would have facilitated wider consideration for other options to reform IHT reliefs. The consultation stated draft legislation would be published “later this year” - at the time of writing we are still waiting.

Whilst we wait further clarity to come from the policy makers, for business owners, our advice is to be open in dialogue with your successors and, together, be clear on the plans for the business succession. Safeguarding the family business for generations to come is only possible if everyone’s goals are aligned.

Given the fast-approaching April 2026 reform date, IHT efficiency is understandably at the forefront of our readers minds. There are, however, other taxes and equally or more important factors to bring to the table for consideration;

• What does the next generation want to do?
• Is the next generation ready to step up?
• Is there enough cash to afford and support the multigenerational business?
• If not now, when?

It is entirely possible that, once the current situation has been considered, doing nothing right now is also a valid plan. The benefits of which may be;

• No immediate charge to Inheritance Tax (IHT), Capital Gains Tax (CGT) or Stamp Duty Land Tax (SDLT)
• Tax free uplift to probate value for CGT purposes
• Retain benefit of income and use of assets
• Avoid unnecessarily complicated structures and/ or unintended consequences where premature or inappropriate gifts are made to mitigate tax exposure.

1. Assess current exposure

2. Is life insurance affordable?

3. Set out family goals and objectives – what makes sense and is it in line with family values? What is the right timing?

4. If it’s appropriate to make lifetime gifts or utilise trusts - engage with your advisors early on for specific advice tailored to your family and business circumstances. This is often most beneficial via a collaborative approach between advisors.

5. If it makes sense to do so now - implement plans. Alternatively, if it is anticipated the legislation will have a material impact, have a plan ready to implement but pause until there is precise certainty over the new rules. There is a trade-off here between waiting for certainty over the future regulatory framework and starting the seven-year clock as soon as possible for both potentially exempt transfers (PETs) and transfers into trust - chargeable lifetime transfers (CLTs). Equally, with only ten months to go, professional advisors will be busy, in the lead up to April 2026.

Sadly, there are cases in the news of farmers and landowners finding the turbulence in the industry and economic outlook a bleak prospect. While we do not work directly with the Royal Agricultural Benevolent Institution (RABI), we fully support the work they do, along with the farming community network (FCN), in assisting those in need. We encourage anyone who is struggling to reach out for support.