High Court refuses challenge to consultation on IHT reforms
The High Court has refused permission for judicial review of the Government’s approach to consultation in relation to its reforms to inheritance tax (‘IHT’) reliefs for agricultural and business property (‘APR’ and ‘BPR’).
The claim, brought by farming representatives, did not challenge the substance of the reforms. Rather, it focused on how they were introduced, arguing that the Government had committed to meaningful consultation on significant tax changes and had fallen short in this instance.
The Court disagreed. It found no clear and binding promise to consult in the way contended for and, in any event, considered the issues to be closely bound up with the Parliamentary and Budget process, and therefore not appropriate for determination by the courts. The claim was also brought out of time. Taken together, the Court concluded that the matter was not suitable for judicial review.
The practical position is therefore unchanged: the reforms under the Finance Act 2026, in force since 6 April 2026, remain in place.
A shift in the planning landscape
APR and BPR have long been central to succession planning for farming families and owner-managed businesses. The availability of uncapped 100% relief meant that, in many cases, assets could pass on death with minimal IHT exposure, often with relatively limited need for planning.
That position has now changed.
Full relief is effectively capped at £2.5 million per individual (with transferability between spouses and civil partners), with relief at 50% thereafter. While still valuable, this exposes larger estates to IHT in a way that would not previously have arisen.
For businesses and farms where value is tied up in illiquid assets, the question is now less whether relief applies, and more how any resulting liability might be funded.
Planning points
Whilst the changes to APR/BPR are already in force, a review of existing arrangements is still highly advisable if no pre-5 April 2026 planning has been carried out. In particular:
- Ownership structures should be revisited to ensure allowances are used effectively
- Lifetime planning may help mitigate future exposure
- Liquidity planning, including insurance or borrowing, may be needed to meet IHT on death, noting that APR/BPR assets tend to qualify for the instalment option of paying IHT (where the IHT due can be paid in ten equal annual instalments) and the government have confirmed that interest won't apply to the outstanding IHT insofar as it relates to APR/BPR assets
For some families, this may mean moving away from a purely testamentary approach towards more active planning during lifetime.
Looking ahead
The broader debate around these reforms is likely to continue, but the legal position is now clearer. APR and BPR remain valuable reliefs, but they no longer provide complete protection in all cases. Early and considered planning will be key.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
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