High Court Grants Urgent Hearing on Labour's Inheritance Tax Overhaul
The High Court has granted permission for an urgent hearing to proceed, challenging the government's controversial inheritance tax reforms that specifically target agricultural assets and family-owned businesses. This legal action represents a significant escalation in the ongoing dispute over one of the most substantial shifts in UK inheritance tax policy witnessed in decades.
Legal Challenge Against Inheritance Tax Changes
The proposed alterations to agricultural property relief (APR) and business property relief (BPR) have sparked considerable opposition from rural communities and business owners across the country. Following an initial increase of the inheritance tax threshold to £1 million, the government faced a year of sustained backlash, leading to a partial reversal announced in December. This adjustment saw the threshold lifted to £2.5 million, with the changes scheduled to take effect from April 2026.
However, the policy now faces a formal legal challenge from farmers Thomas Martin and George Martin, alongside the campaign group Farmers and Businesses for Fair Tax Relief, and the professional services firm Alvarez & Marsal. These parties are collectively seeking a judicial review, arguing that the government's decision to conduct only a limited technical consultation on a narrow aspect of the proposed reforms was fundamentally unlawful.
Claims of Unlawful Process and Consultation Shortcomings
The claimants assert that the lack of a more comprehensive and thorough consultation process fell well short of established legal standards, thereby breaching public law duties owed to them and other affected parties. They contend that such a significant legislative change, which limits longstanding inheritance tax reliefs, was introduced without proper consultation, contrary to well-established principles of policy-making.
Despite the Finance Bill already being at the Committee stage, which means the court cannot order a new consultation or prevent the law from coming into effect, the claimants are pursuing a formal declaration that Labour's process was unlawful. This legal manoeuvre aims to highlight procedural failures and ensure that due process is upheld in future policy decisions of similar magnitude.
Urgent Hearing and Procedural Details
Mrs Justice Lang has ordered the case to proceed to a rolled-up hearing over two days, scheduled for February or March 2026, despite acknowledging regrettable administrative delays by court staff. James Austen, a partner at Collyer Bristow who is representing the claimants, emphasised that such rolled-up hearings are exceptionally rare and underscore the critical importance of this case.
In a notable development, the Speaker of the House of Commons has been granted permission to intervene as an interested party. This intervention is intended to address matters concerning Parliamentary privilege and the separation of powers, adding a constitutional dimension to the proceedings.
Stakeholder Perspectives and Future Implications
Marvin Rust, head of Alvarez & Marsal tax EMEA, commented on the situation, stating, We work with many family businesses and farms who need certainty. 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.
Thomas Martin echoed this sentiment, adding, I look forward to taking this important case to court to ensure due process is followed. The outcome of this hearing could have far-reaching implications for how future tax policies are formulated and consulted upon, potentially setting a precedent for governmental accountability in legislative processes.
