- Legal challenge moves ahead
- Policy shift under scrutiny
- Court limits what it can change
The High Court has approved an urgent hearing to examine the government’s changes to inheritance tax reliefs for agricultural assets and family-owned businesses, a move that has drawn strong opposition from farmers and advisers.
The case focuses on reforms to agricultural property relief and business property relief, among the most significant changes to UK inheritance tax policy in decades. The reforms followed the government’s decision to raise the inheritance tax threshold to £1m, a move that triggered widespread criticism from rural communities and business groups.
In December, Labour announced a partial U-turn, lifting the threshold to £2.5m from £1m, with the change set to take effect from April 2026. The revised plan was framed as a response to a year of backlash, though concerns about the process behind the reforms have continued.
The policy is now being challenged in court by farmers Thomas Martin and George Martin, the campaign group Farmers and Businesses for Fair Tax Relief, and professional services firm Alvarez & Marsal. The claimants are seeking a judicial review, arguing that the government acted unlawfully by carrying out only a limited technical consultation on a narrow part of the reforms.
They say the lack of a broader consultation fell short of established legal standards and breached public law duties owed to those affected by the changes.
The court side
Because the Finance Bill has already reached the Committee stage, the court cannot order a new consultation or block the law from coming into force. Instead, the claimants are asking for a formal declaration that the process used to introduce the policy was unlawful.
Despite what were described as “regrettable administrative delays” by court staff, Mrs Justice Lang has ordered the case to proceed to a two-day “rolled-up” hearing in February or March 2026. Partner James Austen at Collyer Bristow, acting for the claimants, reportedly said such hearings are “exceptionally rare” and reflect the importance of the case.
The Speaker of the House of Commons has also been granted permission to intervene as an interested party, with a focus on parliamentary privilege and the separation of powers.
Marvin Rust, head of Alvarez & Marsal tax EMEA, was quoted in a news report as saying that family businesses and farms need certainty. He reportedly added that limiting long-standing inheritance tax reliefs without proper consultation runs counter to well-established principles.
Thomas Martin also said he looked forward to taking the case to court to ensure due process is followed, according to a news report.
The hearing is expected to test not the substance of the tax changes themselves, but how far the government met its legal duties when reshaping a policy with wide-reaching implications.
