Rural businesses freeze investment over inheritance tax, CLA finds

Some rural family businesses are deliberately running down their holdings to shrink a future inheritance tax bill, a survey of 700 businesses by the Country Land and Business Association (CLA) has found, with 89% pausing investment since the reliefs were cut. For the estates and farms that host much of Britain’s shooting, the association says the changes mean cancelled buildings, machinery and reservoirs, and it wants the reforms reversed at this month’s Budget.

What did the CLA survey find?

Of the businesses that have cancelled investment, more than a third have shelved projects worth over £150,000, while 64% have abandoned plans worth more than £50,000. Respondents described cancelling holiday lets, putting off machinery purchases, delaying reservoirs needed for drought and letting buildings and land deteriorate.

One respondent told the association: “I am doing everything I can to devalue my business to reduce the tax burden for my children.”

Why does the £2.5 million allowance fall short?

Under the reforms, which took effect in April 2026, 100% inheritance tax relief applies to the first £2.5 million of qualifying agricultural and business property, with 50% relief above that level. The government argues the allowance shields most family businesses, but almost 85% of those surveyed said it would not cover the value of their operation once land, machinery, livestock and crops are counted together.

Because such businesses are typically asset-rich but cash-poor, the CLA warns of a cycle of land sales and borrowing. Nearly half of respondents said they would have to sell at least a quarter of their land to cover a future bill, and one in four said more than half. Seven in ten are worried their business will not survive the next 10 years, and 29% are seriously considering leaving farming within five.

What is the CLA asking the Chancellor to do?

The association is calling on Prime Minister Andy Burnham and Chancellor John Healey to scrap the reforms at the Budget. CLA president Gavin Lane said: “Families who’ve spent decades building up their businesses are being forced to shrink them down again just to keep hold of them. They are scaling back ambitions, letting buildings deteriorate, and stripping out value, all to pass on businesses that may no longer be profitable.”

“Burnham says he wants growth in every postcode. But this will be impossible until he reverses the tax actively destroying it,” he added.

Pressure is building on the government benches too: Farmers Guardian reported on 1 October that Labour MP Markus Campbell-Savours has called for the changes to be scrapped outright rather than amended.

What happens next

The Budget falls later this month, and the CLA is urging members to write to their MPs, particularly in Labour-held seats, and to invite them onto farms and estates to see the effect of the changes at first hand. Shoots that sit within family land businesses will be watching the Chancellor’s decision as closely as any farm.