The Chancellor’s Autumn Budget - what has been announced on IHT

26 Tachwedd 2025

NFU Cymru has described today’s Budget announcement on inheritance tax as a ‘limited change’ to a damaging and destructive tax.

In her Budget, the Chancellor announced a change to the rules which will allow those farmers who are married, or have deceased spouses, to transfer their inheritance tax allowance to one another if one of them dies having not used their allowance. The union believes this change doesn’t go far enough, nor will it alleviate the serious impact of the tax on the elderly and terminally ill.

NFU Cymru President Aled Jones said: “I acknowledge the change announced today will help a limited number of farmers, but it does not mitigate the devastating impact of this policy for many. 

Mistakes made

“In making this change the UK Government is essentially recognising that mistakes have been made in the way in which this policy was designed. I welcome the fact that they appear to be acknowledging these errors, but the step they are taking does not go nearly far enough to reduce the damage that this policy will do to Wales’ family farms, our rural communities, Welsh language and culture.

“Over the last 12-months or so some truly heart-breaking accounts have been shared with me of elderly farmers or those diagnosed with terminal illnesses, who have in good faith arranged their affairs on the basis that their estates would not be subject to inheritance tax. These farmers now find themselves caught in the crosshairs of this policy with no time left for them to make alternative succession arrangements. This acute impact on the elderly and terminally ill remains a huge concern, and for them, in particular, we keep fighting.

Strength of feeling

“Yesterday, on the eve of the Budget we saw hundreds of visitors to the Royal Welsh Winter Fair gladly playing their part in sending a message to the Chancellor. The visual display saw participants hold up tiles to form a mosaic spelling out a clear ‘NO IHT’ message to the Chancellor. This signalled the strength of feeling that exists in the farming and rural community, as well as amongst the businesses that rely on them, over the UK Government’s planned changes to inheritance tax reliefs.

“Earlier this month, the House of Commons’ Welsh Affairs Committee also reported back on inheritance tax as part of its wider enquiry into Farming in Wales. The report of that cross-party committee was unanimous in recommending to the UK Government that they delay the APR and BPR reforms until a Wales-specific impact assessment has been published and scrutinised by the committee. I echoed and endorsed that call to UK Government a fortnight ago and I make it again now in light of today’s limited change, which does not go far enough in terms of addressing the impact of the Government’s policy.”  

'Thank you'

Mr Jones concluded with a thank you to all those who have supported the union’s efforts over the last 13-months: “I owe a huge debt of gratitude to NFU Cymru members, rural businesses and members of the public who have supported our efforts so far in ensuring the sector’s voice is heard loud and clear. I also want to extend a particular thanks to backbench MPs of all parties who have spoken out against the policy and lobbied hard for a change. We will continue to work with this large group of Parliamentarians who recognise that the policy the government has chosen is wrong.”

What does the change to the family farm tax mean?

Latest update: Currently, the first £325,000 of assets in any individual’s estate are exempt from inheritance tax; this is known as “the nil rate band”.  This is available to everyone – whether they are a farmer or not.
 
If you leave assets to your spouse or civil partner, they are usually exempt from inheritance tax.  Because you are transferring ‘across’ to your spouse, rather than ‘down’ to your children, you haven’t used your nil-rate band, so the band is transferred to the surviving partner. For example, if the husband dies first, the wife will have two nil rate bands when she dies – hers and her husband’s.  
 
Originally, the family farm tax didn’t allow the £1 million APR/BPR allowance to transfer between spouses. So, if the wife died first and left everything to her husband, he would still only have one £1 million allowance to pass on to his children.
 
The Chancellor has now changed this. The £1 million allowance can be transferred between spouses. This means a farmer doesn’t have to leave £1 million of agricultural assets to their children when they die. They can leave it to their spouse, and the spouse can use both allowances – £1 million from their partner and £1 million of their own – when passing assets to their children. This is a minor change, but will offer some relief to married farmers who die unexpectedly with young children.

If the first death was before 6 April 2026, it will be assumed the entirety of the allowance will be available for transfer to the surviving spouse or civil partner. This will make the rules fairer for widows and widowers, and reduce complexity.  

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