Jeremy's Blog 21st February 2025: Inheritance Tax, Ukraine, Resilience and Preparation

This article by Jeremy Moody first appeared in the CAAV e-Briefing of 20th February 2025. The archive of Jeremy's Blog is available in the Resources section of the website.

On Tuesday, I, Tom Bradshaw (NFU), Victoria Vyvyan (CLA) and George Dunn (TFA) went by invitation to meet with James Murray, Exchequer Secretary to the Treasury. He is the minister with direct responsibility for the tax system and has answered most of the debates on the Budget’s Inheritance Tax proposals in the House of Commons.

We went into the meeting intending pragmatic and practical discussion of solutions to meet the government’s goals that would be more consistent with sensible business planning, investment and the growth agenda. In particular, we urged the “clawback” proposal for tax to be due should the heirs sell, when money is released, rather than have the tax tail wag the business dog into disposals.

Instead of engaging with such ways to resolve the issues to general benefit, the response was that the Government had learned all it needed to learn, knew all it needed to know, considered all it needed to consider and understood all it needed to understand before issuing the October 30th Budget with these proposals. There was nothing new to learn, know, consider or understand, even with all exploration of the issues since the Budget. Perhaps not the best of possible worlds, this was still the best policy they could have to raise money, protect those who should be protected and tackle farmland used for tax avoidance. The Government’s figures remain the figures. The mitigations were calibrated to be generous. No change or reform was needed.

Even setting aside the substantial disagreements about the numbers of those brought into tax and the consequences for farm businesses, there was no indication of any willingness to talk about alternatives or to temper the policy for those who are trapped as ill, aged or widowed.

At present, that looks like an impasse. We can only wait to see how the story runs now, the Spring Statement, the legislation (which should have an Impact Assessment with it), the autumn Budget and beyond.

Out there in the larger world, this coming Tuesday marks the third anniversary of Russia’s second invasion of Ukraine with all the blood and treasure spent as Ukraine has fought back for its independence and democracy. The US intervention, treating Putin’s Russia as a partner not a pariah, makes the world much more uncertain and dangerous. For a war that can anyway be seen as a Russian grab to control commodities, Ukraine being a major source of grain and minerals, President Trump now seeks control of its rare earths and other metals. If this really proves to be the capitulation to Russia that it seems, that is a catastrophe for Ukraine and a moral shock to western liberal democracy. The consequences for geopolitics, instability and so UK public finances look harsh.

Lacking the economic growth to be as rich as we were and with the growing risks from climate change, we may find ourselves more anxious to ensure our food supply, for the first time since the Second World War. The Inheritance Tax measures with their relatively small and uncertain tax yield may seem foolish if they sap the capital base for farming, fragment farm structures, inhibit good business planning, frustrate business dynamism and crowd out investment at such a time when we might not be as readily able to draw on the wider world as we did despite the U-boats. The need for productivity improvement and resilience should take us down different roads.

In practice, the needs now are to help clients look at how they might plan and to prepare for the scale of valuations that would be required from April 2026.

This is a prompt to look at succession planning and managing the risk of the new tax liability. The start is to identify who owns what with what value and who has what liabilities. Who are the members of the family to be considered and for what roles? Where might the family reasonably want to be in 10 or 15 years time? The answers begin to frame a strategy that might include gifts, life assurance and conscious retention of assets. This will have already started for many.

Valuations will now be not only of land, buildings and dwellings but also of the machinery, livestock, produce, stocks and goods that have not had to be valued for this. Issues may run from clamp silage to company shareholdings, diversification assets to tenancies. We have just over 13 months in which to prepare.