Reeves Offers Token Concession On Inheritance Tax Relief Reforms

Hopes that the government might soften its controversial changes to inheritance tax reliefs for businesses and farms have been largely dashed, with only a modest adjustment announced in the Autumn Budget 2024.

From 6 April 2026, the 100% allowance for business property relief (BPR) and agricultural property relief (APR) will apply only to the first £1 million of qualifying assets. The Treasury has confirmed, however, that any unused portion of this allowance can now be transferred between spouses and civil partners. The cap will remain fixed at £1 million until 5 April 2031.

Under the revised rules, a surviving spouse could combine their own £1 million allowance with that of their deceased partner, potentially allowing up to £2 million of assets to pass tax-free on a second death. While this offers some relief for succession planning, the tighter definitions and limits introduced last year remain unchanged, leaving many estates liable for the 40% inheritance tax on any excess value.

Paul Andrews, founder and CEO of Family Business United, described the concession as small and insufficient.

“It’s good to see the government acknowledges its original proposals needed revision, but the policy will still have a devastating impact on family businesses and farming families, many of whom face stark choices about what they can retain,” he said.

He warned that the sector remains preoccupied with survival rather than long-term investment.

“Rather than focusing on growth, many businesses are forced to grapple with inheritance tax challenges. This cannot be good for business, the economy, or the communities these businesses support. We need to continue to challenge these proposals and ensure policymakers hear the real-world impact of these decisions.”

He added that Family Business United would persist in supporting the call for a full review, stressing the importance of policies that support family businesses as 'the engine room of the national economy' to help them grow and invest sustainably for future generations.