Farmers challenge inheritance tax reform

Today marked the conclusion of a two-day judicial review in the High Court regarding the government's recent reforms to farm inheritance tax, with farmers and business owners asserting that these changes were enacted unlawfully due to a lack of proper consultation. The proceedings took place at the Royal Courts of Justice in London, where the critical question was whether Chancellor Rachel Reeves failed to conduct a comprehensive public consultation before altering the Agricultural Property Relief (APR) and Business Property Relief (BPR).

Leading the legal challenge is Cambridgeshire farmer Tom Martin, alongside his father George Martin, and the advocacy group Farmers and Businesses for Fair Tax Relief. They are backed by law firm Collyer Bristow on behalf of the financial advisory firm Alvarez & Marsal. Legal experts emphasised the significance of this issue, highlighting the broader implications for the farming community.

Louise Lewis, Head of Trusts, Estates and Tax at national law firm Freeths, commented on the situation, stating that “as this judicial review gets underway, it’s clear that the concerns raised by Thomas and George Martin, Farmers and Businesses for Fair Tax Relief, and Alvarez & Marsal reflect a much wider unease across the farming and family business communities.” She further noted, “the proposed changes to Agricultural Property Relief and Business Property Relief represent one of the most significant shifts in inheritance tax policy in decades.”

Lewis expressed apprehensions regarding the introduction of reforms without the expected transparent consultation, pointing out the repercussions for individuals who depend on these reliefs for future planning. “Introducing reforms of this scale without a full and transparent consultation, as set out in the Government’s own 2011 Tax Consultation Framework, has inevitably caused uncertainty for those who rely on these reliefs to plan for the future,” she explained.

Highlighting the importance of the review, Lewis stressed that “family farms and privately owned enterprises sit at the heart of the rural economy. Any reform that affects their ability to operate and transition sustainably must be developed openly, fairly, and with meaningful engagement.” She concluded by stating that “this judicial review is an important moment to test whether due process has been followed. Whatever the outcome, it is essential that future tax policy development respects established consultation standards, so that farmers and family businesses can plan with confidence and clarity.”

As the outcome remains to be seen, the farming community awaits the court's decision which could significantly impact inheritance tax policy and the future of agricultural businesses in the UK.