A group of accounting firms across England and Scotland have raised concerns about the wider impact of Rachel Reeves’ proposals to cap Inheritance Tax (IHT) reliefs for agricultural and business property.
Armstrong Watson is of one the 10 members firms of The Rural Accountancy Group (RAG) which has launched a new report reflecting on the widespread implications of increased inheritance tax (IHT) on farmers.
Significant changes announced in the Autumn Budget set the combined relief cap for Agricultural Property Relief (APR) and Business Property Relief (BPR) at £1m, with any amount above this receiving 50% relief.
The RAG, which represents around 10,000 farming and agricultural businesses across England and Scotland, hopes to demonstrate the real impact on many farm businesses who have planned their succession based on the current measures, which allow businesses to be handed onto the next generation without a need to sell assets, building stability and confidence.
As assets qualifying for APR and BPR tend to be illiquid, the RAG has raised concerns over how IHT would be funded under the proposed measures without a sale of the business or assets used in the business, affecting even the smallest of farms.
The report also presents alternative solutions the RAG claims will have less of an impact on genuine commercial farming while still raising tax and preventing tax avoidance.
David Threlkeld, Head of Agriculture at Armstrong Watson, said: “There has been much distress from farmers across England and Scotland in the wake of the Autumn Budget IHT announcements.
“RAG has produced the report based on an impact analysis of our respective agricultural client base. It demonstrates very clearly that not only is the premise on which the Government announced the proposals wrong, but also that the impact of these proposals, if left unchanged, will be devastating for our family farming clients. In many cases, even allowing for payment over a 10-year period, the liabilities are simply unaffordable, leaving many on a cliff edge.
“We strongly urge the Government to reconsider its proposals and ensure it supports the rural and small business community.”
If you would like advice and support about how changes to Inheritance Tax reliefs could impact your business and succession plans, please get in touch. Call 0808 144 5575 or email help@armstrongwatson.co.uk.
