Any move to tighten Agricultural Property Relief rules could 'devastate' family farms across the UK, the farming industry has warned.
Chancellor Rishi Sunak is looking at plans to make inheritance tax (IHT) rules stricter in a bid to raise around £800 million a year, the Daily Mail reports.
Currently, people can invest in agricultural land and their children do not have to pay inheritance tax on their value if they are passed on after death.
Business property relief is also in Mr Sunak's crosshairs. This gives up to 100% off IHT if the deceased has an interest in a firm or shares in an unlisted company.
But opponents to Mr Sunak's plans say financial returns from agriculture can be lower than many other businesses.
NFU Mutual explains that APR enables farmers to invest in their long-term future with the knowledge their farm is sustainable for the next generation.
And if these rules are reduced or removed, it could 'seriously undermine confidence' among farmers to make the level of investment currently required for farming to succeed post-Brexit, it says.
Sean McCann, Chartered Financial Planner at NFU Mutual, said: “It would also make it extremely difficult for farmers to change the way they work to meet the industry's ambitious target to be carbon neutral by 2040.
"Combined with cuts in the Basic Payment Scheme from 2021 confirmed this week, many farmers are facing an uncertain financial future.
"The Office of Tax Simplification’s recent report on inheritance tax acknowledged the important role both Agricultural and Business Property Relief play in ensuring farms and businesses are able to survive when passing between generations."
