Rachel Reeves faces legal challenge over ‘family farms tax'
A group of farmers and family-owned businesses are taking the Government to court over planned inheritance tax changes.
The claim, served to Chancellor Rachel Reeves and HM Revenue and Customs (HMRC) on Tuesday, demands a judicial review of the controversial inheritance tax raid on the grounds the Government failed to carry out a proper consultation on the major reforms.
The claimants argue that the Chancellor risks pushing through flawed legislation because of her decision to carry out a limited consultation into the changes which were announced in the October Budget.
Rachel Reeves unveiled cuts to inheritance tax relief impacting farmers and business owners as part of her maiden Budget last year.
Under the proposals, farms and family-owned businesses will be eligible for a £1m inheritance tax exemption from April 2026, where previously they could be passed on free from inheritance tax. Assets above the £1m allowance will be subject to a 20pc inheritance tax charge.
The Government launched a consultation on the plans between February and April 2025. But the group of farmers and business owners say this was too narrow, highly technical and only published after a final policy decision had been taken. They argue the Government therefore failed to meet its obligations to consult on major changes in tax policy.
The advice firm, Alvarez & Marsal Tax, has instructed Collyer Bristow, a law firm, to serve proceedings on behalf of the group of affected farmers and business owners.
James Austen, of Collyer Bristow, said: 'The claimants' position is simply that the Government should be held to its public law obligations on matters of tax policy.
'This claim does not seek to overturn the Government's decision to amend agricultural property relief or business property relief, but asks that affected individuals and groups can contribute to a proper consultation exercise to ensure the Government has the best possible evidence when developing its tax policy for UK farms and businesses.'
The Treasury has estimated the changes will raise up to £520m a year by 2029-30.
However, the Office for Budget Responsibility assigned the policy a 'high' uncertainty rating in documents published alongside the October Budget.
Thousands of farmers marched in protest after the so-called 'family farm tax' was announced.
Campaigners warn the changes threaten the future of thousands of family farms, as many farmers are asset rich but cash poor and would have to sell up in order to pay the huge bills.
A Treasury spokesman said: 'We do not comment on potential litigation matters.'
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