Government's Inheritance Tax Plans Criticized by Rural Industry

Strategic Insights -

The government's inheritance tax plans have been met with criticism from the rural industry, with the Country Land and Business Association (CLA) calling the impact assessment of the changes "little more than a token gesture" that fails to acknowledge the damage to investment, growth, and jobs. The reforms, due to come into force in April 2026, are expected to have a significant impact on rural businesses, with a survey conducted by CBI Economics and supported by the CLA revealing that 23% of businesses affected by the change have already cut jobs and paused recruitment ahead of the changes.

Key Takeaways:

  • The government's inheritance tax plans have been criticized by the Country Land and Business Association (CLA) for failing to consider the impact on the rural economy.
  • The reforms, due to come into force in April 2026, are expected to have a significant impact on rural businesses, with many already cutting jobs and pausing recruitment.
  • A survey conducted by CBI Economics and supported by the CLA found that 55% of family businesses and 49% of farms affected by the changes have already cancelled proposed investment projects.
  • The government has claimed that the changes will bring £230m into the exchequer in 2026/27, peaking at £520m in 2028/29, but the CLA argues that this is a small amount compared to total government spending.
  • The reforms will affect an estimated 2,000 estates, with only 520 paying more tax, according to the government's impact assessment, but the CLA believes this could be significantly more due to changes to business property relief (BPR).
  • The CLA has proposed an alternative "clawback" mechanism that would help the government achieve its aims while avoiding the dire consequences of the current proposals.

Statistics:

  • 23% of businesses affected by the inheritance tax changes have already cut jobs and paused recruitment (source: CBI Economics survey).
  • 55% of family businesses and 49% of farms affected by the changes have already cancelled proposed investment projects (source: CBI Economics survey).
  • £230m is expected to be brought into the exchequer in 2026/27 as a result of the reforms (source: Government's impact assessment).
  • £520m is expected to be brought into the exchequer in 2028/29 as a result of the reforms (source: Government's impact assessment).
  • 2,000 estates are estimated to be affected by the reforms, with only 520 paying more tax (source: Government's impact assessment).
  • Total government spending is £1,278bn a year (source: Government's financial data).

Sources:

  • Cath Crowther, "Every rural business I speak to in our region tells me of the dire consequences the government's inheritance tax (IHT) plans will have on them and the communities they are in." (Source: Farming Newsletter).
  • Country Land and Business Association (CLA), "Government's IHT plans will have devastating impact on rural businesses" (Source: CLA website).
  • CBI Economics, "Autumn Budget: Business Impact Survey" (Source: CBI Economics website).
  • Government's Impact Assessment, "Draft IHT Legislation and Impact Assessment" (Source: Government website).