November 10, 2025
Publication
Ahead of the Autumn Statement later this month, The Rural Accountancy Group is urging the government to reconsider the IHT increase on farmers in a new, follow–up report.
Who are the Rural Accountancy Group? (RAG)
The Rural Accountancy Group comprises of 10 accountancy firms from across England and Scotland who act for around 10,000 farming and rural businesses as well as other family and large corporate businesses.
There is a core technical committee of 25 individuals from the 10 member firms, most of whom are Chartered Accountants and Tax Advisors and have a huge amount of experience in their field.
RAG have a keen interest in the future of family business, land management and the associated tax consequences.
Report Overview
This report analyses the consequences of the 2024 Autumn Budget’s proposed changes to Inheritance Tax (IHT) reliefs, focusing on rural, farming, and family businesses across England and Scotland. The new measures, effective April 2026, cap Agricultural Property Relief (APR) and Business Property Relief (BPR) at £1M per estate, with values above this threshold receiving only 50% relief. This fundamentally alters succession planning, business investment, and the financial viability of genuine trading businesses.
Key Findings
- Widespread Impact: Businesses valued over £4M (married couples) or £2M (sole traders) will face significant IHT liabilities, often unaffordable even if paid over ten years.
- Economic Consequences: The report’s case studies reveal that many businesses will be forced to sell assets, reduce investment, or even cease operations, threatening employment, local economies, and UK food production.
- Administrative Burden: Executors and HMRC will face increased complexity and costs due to the need for specialist valuations and the challenge of funding IHT from illiquid assets.
- Succession and Gifting: The new rules encourage earlier asset transfers, but inpractical barriers—such as the seven-year rule, lack of alternative retirement income, and unaffordable life insurance—limit options for many owners.
- Sector-Specific Risks: Farming businesses, hospitality, manufacturing, and commercial enterprises are all at risk, with diversified income streams and supply chains jeopardised.
Recommendations
The Rural Accountancy Group urges the government to reconsider the proposals, suggesting transitional provisions and mitigation strategies to protect business continuity, rural communities, and the wider economy.