GOVERNMENT RAISES INHERITANCE TAX THRESHOLD TO £2.5M
The UK Government has increased the inheritance tax threshold from £1m to £2.5m, due to increasing pressure from farmers and farming unions.
At last year's Budget, a 20% tax on inherited agricultural assets was announced estimated to be worth more than £1m from April 2026, ending the 100% tax relief that had been in place since the 1980s.
Responding to news NFU Scotland President Andrew Connon said: “Today’s announcement is a significant day for the future of Scottish agriculture. The changes set out by the UK Government is a victory for common sense and reflects 14 months of relentless lobbying from NFU Scotland and the other UK Farming Unions in our pursuit to mitigate the worst of the impacts of the policy and protect our family farms.”
The announcement was made after MPs had left Parliament for the Christmas recess. Environment Secretary Emma Reynolds said: "We have listened closely to farmers across the country and we are making changes today to protect more ordinary family farms."
Chancellor Rachel Reeves announced she would be reversing the 100% inheritance tax relief on agricultural assets during her first Budget in 2024. This would have seen inherited agricultural assets worth over £1m taxed at 20%, half the standard inheritance tax rate, raising an estimated £520m annually by 2029.
It has now raised this threshold level to £2.5m and, coupled with an exemption which allows farmers to pass on assets to their spouses tax-free, this new government concession means a couple could pass on up to £5m in qualifying assets, without paying tax.
