Court Hears Rachel Reeves Broke Promises on Farmer Inheritance Tax Reforms
Chancellor Rachel Reeves "broke promises" by failing to consult over significant changes to inheritance tax reliefs in her first Autumn Budget, a court has heard. The legal challenge centers on reforms to agricultural property relief and business property relief, representing one of the biggest shifts in inheritance tax policy in decades.
Substantial Changes to Tax Code
In the 2024 Autumn Budget, Reeves revealed dramatic changes to the tax code, including applying a 20 percent tax to agricultural assets valued over £1 million. Following a year of sustained protests by farmers across the country, Labour announced a surprising partial reversal in December, raising the threshold to £2.5 million from £1 million, effective from April 2026.
The Treasury now faces a judicial review arguing it acted unlawfully by failing to follow its established 2011 'Tax Consultation Framework.' The claimants include farmers Thomas Martin and George Martin from the campaign group Farmers and Businesses for Fair Tax Relief, along with professional services firm Alvarez & Marsal.
Failure to Consult Properly
Barrister Aparna Nathan KC told the court on Tuesday that the framework requires at least one public consultation, but stated categorically that none was conducted for these specific changes. Instead, the Chancellor published a consultation document focusing solely on trusts, which Nathan KC argued constituted "only a limited aspect" of the proposed comprehensive changes to agricultural and business property reliefs.
Nathan KC informed the two presiding judges, Lady Justice Whipple and Mr Justice Fordham, that "the defendants broke that promise" for a proper public consultation. The court is being asked to issue a formal declaration that the Treasury acted unlawfully by failing to conduct adequate public consultation on these substantial inheritance tax relief changes.
Constitutional Questions Raised
Another significant argument in the case concerns whether the court possesses jurisdiction to review executive actions that ultimately lead to legislation. Lindsay Hoyle, the Speaker of the House of Commons, was granted permission to intervene in the case due to the constitutional issues at stake, with arguments expected to be presented on Wednesday.
According to court documents, the Speaker takes issue with the claim on the basis that it infringes Parliamentary privilege, particularly since the Finance Bill containing the relevant provisions is currently being read at the House of Lords. In the Speaker's opinion, "the claim now appears to be academic, given that the Finance Bill has been introduced with the relevant provisions, and is currently before Parliament," and that the court would be engaging in a "confrontation" with Parliament if it proceeded.
During Tuesday's proceedings, the two judges challenged the "separation of powers" argument presented by the claimant's barrister. The Devereux Chambers silk countered that the claimants are challenging a decision made by the Chancellor in her executive capacity as a Minister, not as a Member of Parliament, and that this decision occurred outside Parliament's legislative process.
The hearing will conclude on Wednesday following arguments from both the Treasury and the Speaker's representatives, with a judgment expected in the coming months. This case highlights the tension between executive decision-making and proper consultation processes, particularly when significant policy changes affect specific sectors like agriculture.
