The change in direction comes after sustained pressure from the agricultural sector. Farmer organizations and representatives from the sector protested and publicly opposed the earlier plans.
Farming organizations respond with cautious optimism. They call the raising of the threshold a step in the right direction and describe it as a relief for many family businesses.
At the same time, they stress that the adjustment does not remove all concerns. According to them, this is not a final solution and questions remain about the impact on specific companies and situations.
The core change is that the threshold for inheritance tax within agriculture rises from £1 million to £2.5 million. This limit determines which part of an inheritance falls under the scheme for agricultural and business property.
The adjustment applies to both Agricultural Property Relief and Business Property Relief. This covers not only farmland but also inheritances of other agricultural business assets.
From now on, a full exemption applies up to a value of £2.5 million. This means that no inheritance tax will be charged on that portion of an agricultural inheritance under these schemes. According to calculations, around 85 percent of agricultural inheritances will no longer be subject to these rules.
The system also changes for amounts above the threshold. A full exemption no longer applies there, but a partial one does. For married couples and partners, the space could be larger. They can pass on a higher total amount jointly since the exemption can be applied per person.