A new judicial review, fronted by Save British Farming founder Liz Webster, will argue that farmers in Northern Ireland (NI) should be exempt from recent restrictions on agricultural property relief (APR) and business property relief (BPR).
Under the Windsor Framework, NI remains aligned with EU rules on agriculture and goods, meaning, campaigners say, that removing these reliefs while EU farmers retain them amounts to unlawful discrimination under the UK–EU trade deal.
Ms Webster called it ‘a really groundbreaking legal argument’ that could create a ‘volcanic situation’ for Keir Starmer’s government. She warned that a court victory for campaigners would pile pressure on ministers to reinstate reliefs in Great Britain or risk opening tax-planning loopholes via NI connections.
Liz Webster, founder of Save British Farming
The legal move comes as inheritance tax (IHT) returns to the Treasury’s agenda. Chancellor Rachel Reeves is under pressure to plug a £50bn hole in the public finances ahead of the Autumn Budget, and is understood to be considering changes to the long-standing ‘seven-year rule’, which allows gifts made more than seven years before death to pass free of IHT.
Under current rules, gifts made between three and seven years before death are taxed on a sliding ‘taper relief’ scale, with rates falling from 32% to 8% the further away from death they are made. Officials are also looking at a lifetime cap on the value of gifts that can be made outside the IHT net, and reviewing whether the taper rate should change.
The Treasury’s search for revenue comes after Labour’s election pledge not to raise the basic, higher or additional rates of income tax, employee National Insurance or VAT left Ms Reeves with fewer levers to pull. U-turns on welfare cuts, higher debt interest payments and sluggish growth have further widened the gap between spending commitments and the party’s ‘stability rule’.
IHT currently applies to estates worth more than £325,000, with a top rate of 40%. While APR and BPR have shielded most working farms from the tax, Reeves’ decision in last year’s budget to pare back relief on some high-value land and assets angered the rural sector. Any further tightening of gifting rules could make lifetime succession planning harder and more expensive.
A source familiar with Treasury thinking told The Guardian: “With so much wealth stored in assets like houses that have shot up in value, we have to find ways to better tap into the inheritances of those who can afford to contribute more.”
IHT receipts hit a record £6.7bn in 2022–23 and are forecast to climb as frozen thresholds drag more estates into the net. Officials are also understood to be exploring capital gains tax tweaks, potentially paired with allowances for UK business investment.
The government says its priority is to grow the economy. A Treasury spokesperson said: “We are committed to keeping taxes for working people as low as possible. Changes to tax and spend policy are not the only ways of strengthening the public finances.”
No decisions are expected before the Autumn Budget, but with both the seven-year rule and the NI legal challenge in play, farming families across the UK may need to reassess their succession plans sooner rather than later.