IHT changes violate Brexit deal, say legal campaigners

Farmers are set to launch a fresh legal attack on the UK government’s inheritance tax changes, warning the relief restrictions have breached the terms of the Brexit deal signed in 2020.

A new judicial review will claim that farmers in Northern Ireland (NI) should be exempt from the rules due to the region’s status under the Windsor Framework, which keeps it aligned with EU rules covering agriculture and goods.

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According to the legal argument, removing agricultural property relief (APR) and business property relief (BPR) from NI farmers, while their EU counterparts retain them, would fall foul of rules prohibiting discrimination and unfair competition in the broader UK-EU trade deal.

Liz Webster, founder of the campaign group Save British Farming, is fronting the legal challenge.

She said: “This is a really groundbreaking legal argument, which is going to culminate in quite a volcanic situation, both legally and politically, for Keir Starmer’s government.

“The decision to hit farms and family businesses with a pernicious tax will potentially go down in history as one of the worst decisions ever.”

She added that a win in court for the campaigners would pile pressure on the government to reinstate the reliefs for farmers in Great Britain, or risk the creation of tax-planning loopholes via NI connections.

EU nationals inheriting land in England, Wales or Scotland could also bring claims of unlawful discrimination on the same grounds if NI farmers are exempted from the changes.

Separate legal challenge

Meanwhile, another group of farmers and business owners – including Cambridgeshire arable farmer Tom Martin – have launched a separate judicial review on the IHT relief restrictions.

This challenge, initiated by law firm Collyer Bristow, argues that the government violated long-standing policy by not holding a formal consultation before restricting APR and BPR.

Mr Martin said he believed the chances of success were “between possible and probable”, but added: “It could also make a change, in terms of the Budget coming up this year.

“The government will be looking at all options, from red diesel to rollover relief, because they will be keen to balance the books.

“I would be very confident that if they’re facing legal challenges, having farmers outside their offices with tractors, having people from within and outside the industry writing to their MPs and being cross-examined on radio talk shows, they might think to consult more appropriately on other measures in the future.”