How do inheritance tax changes impact farms and businesses?
Meanwhile, a Gross Value Added (GVA) - an economic indicator measuring the contribution of industry to the economy - could reduce by £15bn across the UK.
Inheritance tax
Inheritance tax is currently charged at 40% on the property, possessions and money of someone who has died, where assets are above the £325,000.
The tax only impacts additional assets, so if a firm was worth £330,000 - only the additional £5,000 would be subject to inheritance tax.
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The Chancellor has said the threshold will remain in place until at least 2030.
It raises around £7bn for the Treasury each year.
Changes to exemptions are coming
The UK Government announced in the autumn budget in October last year that it would restrict inheritance tax relief for agricultural and business property relief - often abbreviated to APR and BPR.
Since the policy changes were announced, it has caused significant uncertainty and drawn criticism from across the industries.
There have been protests across the country, at the UK and Scottish Parliaments, with particular warnings against what is described as the 'Family Farm Tax'.
Farmers have warned of a 'food crisis' if family-owned farms are impacted by the changes.
Tractors lined the streets of central London earlier this year, leaving police to step in and place restrictions on the number of tractors allowed at the demonstrations.
The inheritance tax changes
Farmland and many construction firms are exempt from inheritance tax under APR and BPR.
But the Chancellor confirmed the 100% exemption will be lifted and halved from the next financial year.
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That means that from April 2026, a tax of 20% will be imposed on assets over £1 million
Assets under this will remain exempt.
The concern is that while some of the businesses impacted have assets of several million when they are passed down as inheritance, the physical cash that would pay for the tax is low.
Businesses therefore warn assets would have to be sold, or staff would be let go from their jobs, unless the Chancellor reverses the plans.
The UK Government, however, has said the changes are proportionate and fair and can be paid over 10 years, interest free, to ease the pressure.
What are the cost implications?
The Chancellor has said the changes to both agricultural and business property relief will bring in around £520m per year, combined.
However, it is thought that the economic impact on businesses will be around £15bn GVA.
In Scotland, it could be around 15,000 job losses, at a cost of £1.2bn GVA.
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