Armstrong Watson stands firm against IHT increase on farmers

Armstrong Watson is one of the 10 member firms of The Rural Accountancy Group (RAG), which has submitted an updated report to the House of Lords as part of a call for further evidence in the debate on proposed IHT reforms, emphasising the impact these changes will have on economic growth.

We have also shared the document with MPs of constituencies where our offices are located to present the case that the proposed measures to cap Inheritance Tax (IHT) reliefs for agricultural and business property “will result in permanent long-term damage to businesses, negatively impacting on working people, growth in the economy and UK food production and security”.

In early 2025, Armstrong Watson wrote to MPs to express concerns over the proposals announced in the Autumn Budget, sharing RAG’s initial report on the widespread implications of increased inheritance tax (IHT) on farmers. The report also presents alternative solutions that would have less of an impact on genuine commercial farming (while still raising tax and preventing tax avoidance).

This change would 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, leaving many farming families with significant IHT liabilities. 

The RAG represents around 10,000 farming and agricultural businesses across England and Scotland, with Armstrong Watson’s 150-strong team of agricultural specialists acting for around a fifth of those. It wants to reemphasise the real impact this could have on many farm businesses that 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.  

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 proposed changes, we know, will have a devastating impact on family farms. The Government has repeatedly said that its number one priority is growth and yet, these proposals are completely counterproductive to achieving that ambition. 

That the tax will impact our farming clients is beyond dispute, but the impact on the wider rural economy will also be significant, leaving many farms unable to invest in the infrastructure, equipment and technology that drives innovation and growth. 

We strongly urge the Government to reconsider its proposals and ensure it supports the rural and small business community. 

The RAG’s updated report is available to download here.