Growing speculation that the Chancellor Rachel Reeves is considering making another round of inheritance tax (IHT) changes may force the sale of some farms.

Nick Ainscough, Senior Associate with the rural department at Galbraith, said: “If all the commentary is correct, there will be another round of IHT changes on top of those already announced, which really would spell the death knell for some farms. It is simply unaffordable for the next generation to be saddled with IHT payments from the moment they take on the farm. From all its public statements, the government seems to have based its assessment of the sector on flawed data. It needs to look again.”

Galbraith points out that many farms have already cut back on planned investment, due to uncertainty in the sector, with some also considering sales of assets.

From 6th April 2026, only the first £1m of qualifying property (per individual or trust) will attract 100% Agricultural Property Relief (APR) or Business Property Relief (BPR) from inheritance tax. Anything above that threshold will be eligible for 50% relief, with any chargeable transfers made within seven years of death counting towards the £1m cap.

The implications of these changes for farming businesses are substantial and will affect an enormous number of working farms, far higher than the UK Government’s figures, according to Galbraith.

Commentators believe that another round of IHT changes may be announced in the Autumn Budget on 26th November, including amendments to Potentially Exempt Transfers and the lifetime gifting allowances.

Current gifting rules allow for ‘gifts’ to be exempt from inheritance tax if the donor survives for seven years after making the gift, with taper relief ensuring that the rate of tax gradually drops between three and seven years after the gift is made. 

The proposed changes that are being considered supposedly include the introduction of a cap on total gifts allowed before death; the potential removal or reduction of taper relief; and possibly increasing the exemption period to 10 years.

If confirmed, these changes would be even more significant for land-based businesses than the measures introduced in the 2024 budget as they would effectively close the only remaining recourse for many family businesses to implement successful succession strategies that are not handicapped by inheritance tax liabilities, Galbraith reports.

Nick Ainscough continued: “Rural businesses operate on long-term considerations and investment has to be based on a strategic evaluation of all the factors potentially affecting profitability, as far as these can be assessed. With all the volatility in the sector, pressures on consumer spending, fluctuations in farmgate prices and a rapidly changing legislative environment, a tax raid by the government is absolutely the final nail in the coffin. We will see small farms being forced to sell up unless they have taken measures to mitigate their risk.”

Galbraith  is one of the leading agricultural advisers in Scotland and the North of England, managing farm, forestry, land and estate interests across over 4.5 million acres.