As the dust settles after yesterday's reforming #budget2024, it's time to look at what the reforms to Agricultural Property Relief (APR) from Inheritance Tax (IHT) actually mean, instead of the toys out of the pram reaction from a section of the farming community. A short 🧵 1/7
Up until yesterday farmland (and buildings) of any size, could be passed on to descendants entirely free of any IHT liability. Considering land is an asset whose value generally goes up, this increase in value is not taxed, unlike other assets where Capital Gains Tax applies 2/7
What the Chancellor did yesterday was put a cap on the tax-free passing of farms via inheritance - a £1M cap. Note this is in addition to the existing IHT nil rate band worth £1M to a couple & a surviving spouse. So a £2M farm can still be passed on without any IHT liability 3/7
The Treasury published this useful table yesterday showing the number & value of estates where APR was claimed, in the most recent year 21/22. Note the relevant band is £1M to £2.5M & the median value in that band is £1.47M. So most of the farms in that band will be <£2M. 4/7 
So of the 1730 farms that claimed APR, 200-250 farms would now have to pay some IHT. That's between 12 & 14% of farms. 86-88% of farms would still pay no IHT under the new rules. The bulk of the new IHT liabilities would fall on very large farms/estates, not "family farms". 5/7
And even for those large farms worth over £2M the Chancellor has still given them a tax break, relative to all other estates. APR will only be charged at half the normal IHT rate - ie 20% not 40%. And unlike other estates farms can pay their IHT spread over a 10 year period. 6/7
Finally it's worth considering where the value in farmland comes from. Farmland has doubled in value (roughly) since APR was introduced in 1986. That's regardless of what a farmer has done to the land. This reform puts a 20% tax on that value ⬆️, for estates worth over £2m. 7/7
Bonus tweet: some advisors are suggesting that for a farming couple they could claim £1M of APR relief each. If this is the case the value of a farm where no IHT would be paid on inheritance is up to £3M.
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