House of Commons · Urgent Question
23 January 2025 · 20 other contributors
Opened by Victoria Atkins Con Louth and Horncastle
Summarised by AI from the official record, so it can contain mistakes.
Victoria Atkins raised concerns about agricultural and business property reliefs obr costing 2025-01-23 in the House of Commons. A government minister responded. Other MPs also contributed.
Key points
MPs spoke in turn to share their views and ask questions. Here's what each person said.
Opened the debate
Will the Minister confirm the assessment made by the Office for Budget Responsibility regarding the costing of changes to agricultural and business property relief, given that these reforms have raised concerns among farmers, farming businesses, professional advisers, economists, and major supermarkets?
Question
Will the Minister commit to a full review of this policy in light of OBR's analysis? What is her assessment of the number of farms affected by changes, tenant farmers potentially evicted, and why major supermarkets are against these measures?
Minister reply
The data on the number of affected estates claiming APR (530) is consistent with previous statements. We are working in partnership with supermarket chains to drive economic growth; while some difficult decisions were made at Budget, we are determined to work with businesses across the country.
Question
Does the Minister agree that keeping this loophole open has pushed up land prices and pushed out young farmers?
Minister reply
Certainly, there is evidence that the current inheritance tax system has caused people to use reliefs for tax planning. 40% of APR benefits top 7%, and 50% of BPR benefits top 4%. We think this measure is neither fair nor sustainable.
Question
Will the Minister do the right thing and scrap this tax given the uncertainty about income from these proposals over the next two decades?
Minister reply
The OBR document published reiterates conclusions from October. The level of uncertainty associated with policy is typical, but we are determined to work in partnership with businesses for economic growth.
Question
Does my hon. Friend agree that the Conservative party has failed again on this issue?
Minister reply
The parties opposite routinely support Government spending and investment decisions but not difficult decisions needed to fund them.
Question
What would he be saying if in opposition against a Conservative Government's Treasury policy?
Minister reply
We had to take tough decisions recognising the context of inheriting from previous Government; balancing public finances and economic stability is prioritised.
Question
[Question not recorded]
Minister reply
The weight of opinion is against these proposals, but the Minister did not directly respond to this question as it was cut off by Mr Speaker.
Question
Why does the Minister not agree to broaden HMRC's technical consultation terms, engage with farming communities, and look for a way to protect family farms while getting at those sheltering wealth in land?
Minister reply
[Response not recorded]
Question
How will the Minister explain to farmers in Hurcot near Somerton that according to the OBR, the potential loss of their family farm business is likely to have little impact on public finances? What assessment has been made about the policy's impact on older farmers?
Minister reply
The OBR’s publication sets out the costings from October's Budget, with no difference between then and what was published yesterday. It shows more background behind how costings were calculated for transparency. Our reform maintains generous exemptions from inheritance tax; £1 million is subject to relief, along with 50% relief beyond that, nil-rate bands, and other exemptions.
Question
What assessment have the Government made of the policy’s impact on vets, feed merchants, machinery suppliers, and all those who support the rural economy?
Minister reply
Supporting the rural economy is part of Labour's mission to get the economy growing. However, stable public finances are a prerequisite for that investment and growth. The decision was taken alongside other difficult Budget decisions.
Question
Will the Minister pause the measure to reconsider its impact on family farming, despite the OBR's confirmation of the costings?
Minister reply
The Government are committed to delivering Budget reforms. They were carefully calibrated to retain generous inheritance tax exemptions while balancing public finances fairly.
Question
Will the Government finally listen, show humility, and consult on how best to tackle tax shelterers while still protecting farmers?
Minister reply
The reform of agricultural property relief maintains generous exemptions from inheritance tax; £1 million is subject to relief, along with 50% relief beyond that, nil-rate bands, and other exemptions.
Question
Has the Treasury made an assessment of the impact on Scottish tenant farms under the Agricultural Holdings (Scotland) Act 1991?
Minister reply
The way to calculate the impact is by looking at inheritance tax claims. The Government used HMRC’s data on past and projected inheritance tax reliefs as the basis for policy design.
Question
Will the Minister please look again at the Treasury's modelling to ensure it takes into account family farms using a BPR-only claim, tenant farmers who use BPR, and rural businesses that will also use BPR?
Minister reply
The need to reform business property relief is as strong as agricultural property relief, given fiscal context inherited from previous government. The policy aims to provide generous exemptions while ensuring fairness.
Question
Will the Minister agree to delay implementation until the effects are properly understood by both farmers and the Government?
Minister reply
The Government are committed to delivering Budget reforms, carefully considering their impact and designing policy to provide generous exemptions while balancing public finances fairly.
Question
Does the Minister still believe in this policy given uncertainty in OBR's report, its impact on elderly farmers, food security risks, and rural community suffering?
Minister reply
The OBR’s allusion to a degree of uncertainty is the same as at Budget time. Costing, degree of uncertainty, and calculations remain exactly the same.
Question
At what point will the Minister recognise that they have got this badly wrong given higher-than-expected debt figures?
Minister reply
The country decided to change course, electing us into government to fix public finances, support services, boost investment and grow the economy.
Question
Why does he not just pause, go back, listen, and review the policy?
Minister reply
The Government are committed to delivering Budget reforms. They were carefully calibrated to retain generous inheritance tax exemptions while ensuring fair public finances.
Question
There will be a rally on Saturday, and the Minister appears to imagine that this indicates acclamation for his policy. We heard earlier in the week from the hon. Member for Falkirk (Euan Stainbank) and today from the hon. Member for Newcastle upon Tyne Central and West (Chi Onwurah)—both well-known rural areas—that this is all about the landed estates and wealthy people, but I can assure the Minister that the farmers I will speak with in Castle Douglas on Saturday are tenant farmers and family farmers, and they face being put off the land after generations. Is he really suggesting that I should tell them they have nothing to worry about?
Minister reply
I am not going to tell the hon. Gentleman what he should say to his constituents, but what I can tell him about the Government’s policy is that we have reserved generous inheritance tax reliefs for people in the situations he describes. I encourage anyone who is concerned to seek advice, to understand exactly how the new rules might apply to them.
Question
Sometimes I am absolutely flummoxed—we probably all are—by the Chancellor’s intent to tax working family farms, which we all know will result in the loss of small farms, the sale of the land and a reduction in food security. Now it seems that the OBR agrees that it will not make savings. Will the Minister commit to meeting Cabinet colleagues urgently to remove the sword of Damocles that is hanging above small family farms and hurting the agrifood sector as a whole? I say to the Minister that there is a way forward: increase the threshold from £1 million to £5 million, and family farms will be saved.
Minister reply
I thank the hon. Gentleman for his question, but I think it was based primary on the OBR publication yesterday. I reiterate the point I have made several times now: that OBR publication reiterated the costings and figures set out at the Budget, it reiterated the level of uncertainty associated with the measure, as published at the Budget, it provides more detail behind that, but the conclusion is the same as it was on 10 October.
Government Response
At the autumn Budget, we took difficult decisions on tax, welfare and spending that were necessary to restore economic stability, fix the public finances and support public services. We had to do this to address the mess we inherited from the previous Government. The Government are better targeting agricultural property relief (APR) and business property relief (BPR) to make them fairer. These reforms mean significant levels of relief from inheritance tax beyond what is available to others despite a tough fiscal context. Under the current system, APR benefits heavily skew towards the wealthiest estates; according to HMRC, 40% of APR benefits the top 7%, and for BPR, over 50% benefit just 4%. Our reforms mean individuals can access 100% relief for the first £1 million of combined business and agricultural assets, with 50% thereafter. Given nil rate bands, this means couples can pass up to £3 million between them inheritance tax-free. Almost three quarters of estates claiming APR in 2026-27 will not pay more inheritance tax under these reforms, a fair approach protecting farms while fixing public services.