IHT breakthrough for household corporations: Judge orders evaluation into Reeves’ demise duties

Family farms and businesses are celebrating a breakthrough in a battle to overturn an inheritance tax raid that threatens to destroy livelihoods and generations of hard work.

The High Court has ordered an urgent two-day judicial review of the Chancellor’s plans to hit family-owned enterprises with death duties.

In her Budget in 2024, Rachel Reeves announced changes to agricultural property relief (APR) and business property relief (BPR) that left family farms and firms facing inheritance tax of 20 per cent on assets worth over £1million from this April.

The changes provoked a backlash with farmers driving tractors through London in protest. 

Last month, the Chancellor backtracked, raising the threshold from £1million to £2.5million, or £5million for married couples.

But this still leaves farmers and businesses facing inheritance tax bills. 

Blocked: The High Court has ordered an urgent two-day judicial review of the Chancellor’s plans to hit family-owned enterprises with death duties

The judicial review means claimants can argue the Government’s failure to consult fully on the plans was unlawful.

There will now be a ‘rolled-up’ two-day hearing in February or March – combining the decision on whether the case can proceed with a full hearing on its merits.

James Austen, at law firm Collyer Bristow, which is acting for the farmers and businesses, said: ‘The decision to hear this important case urgently is fantastic news and long overdue. 

This development means that a High Court judge will rule on whether the Government acted unlawfully. 

Rolled-up hearings are unusual – and for one to be listed so promptly is exceptionally rare.’

Marvin Rust, a tax expert at Alvarez & Marsal working on the case, added: ‘Limiting longstanding inheritance tax reliefs is an important legislative change, which was introduced without proper consultation, contrary to well-established principles. 

That is not how policy of this magnitude should be made. We welcome the court’s expedited hearing to determine the lawfulness of the process.’