New figures show vast majority of inheritance tax breaks for farms and businesses go to the very wealthiest families
In 2016/17 the government handed out £2.1bn in inheritance tax breaks for farmland and businesses. According to new figures released by Tax Justice UK today, almost 70% of this went to property worth over £1m.
Reports in advance of the budget suggest that the Chancellor Rishi Sunak is looking to restrict inheritance tax breaks. This would help to fulfil the Conservative manifesto pledge to limit the “arbitrary tax advantages for the wealthiest in society”.
Robert Palmer, Executive Director of Tax Justice UK said: “The Chancellor is desperately looking for money to help ‘level up’ left behind parts of the country. Restricting inheritance tax breaks to the most needy families would be a sensible way to do this.”
In June 2019, we published the report In Stark Relief, which exposed how the current system of inheritance tax breaks favours very well off families. The current system of reliefs is on top of the tax free allowance of up to £950,000 that is available to married couples. Tax Justice UK is calling on the government to review inheritance tax reliefs and consider a cap on the amount that can be claimed.
Agricultural property relief reduces inheritance tax on agricultural property at a rate of up to 100%, while business property relief reduces tax on business property and shares by between 50 and 100%. The special treatments for agricultural and business property are often justified as a means of protecting small family farms and businesses, but the reality is that most of this support goes to the wealthiest families.
The new figures released are based on a Freedom of Information Act request to HMRC.
Notes to editors
Tax Justice UK asked HMRC to provide information on the distribution of Agricultural Property Relief and Business Property Relief. 2016/17 is the most recent year that figures are available for. HMRC provided this information split by the value of the property that relief was claimed on. The figures in the table below are for the total value of the property, as opposed to the amount of tax saved.
A copy of the FOIA request and response is here.