New Lords Committee report on IHT is ‘recognition of government's failure to properly consult’

A House of Lords sub-committee has published a new statement on the draft Finance Bill 2025-26. The report, ‘Inheritance tax measures: unused pension funds and agricultural and business property reliefs’, sets out its recommendations on upcoming inheritance tax (IHT) changes that could have important implications for farmers, landowners and rural businesses.

The inquiry focussed on bringing unused pension funds and death benefits into the scope of inheritance tax, as well as the reforms to agricultural and business property reliefs (APR and BPR).

In the report, the committee has urged the UK Government to make several adjustments to ease the burden on those managing rural businesses, including to:

• extend the inheritance tax payment deadline for these measures from 6 to 12 months
• introduce safe-harbour periods from late interest payments for personal representatives not at fault for missing deadlines
• take steps to raise awareness of the reforms and produce practical guidance and support for those affected
• monitor the long-term impact of the reforms on farms and businesses and consider changes that may need to be made as a result

It's now over to the government to consider the committee’s recommendations as the Finance Bill progresses.

CLA Deputy President Joe Evans said: "This report confirms the realities of this policy. The partial climbdown before Christmas was welcome, and shows government now understands at least some of the harm inheritance tax reform is doing to the economy."

“We will continue to do all we can to protect rural family businesses, and campaign for an economic policy that champions, not harms, their enterprises.”