Insight 42 - Magazine - Page 25
The Government truly needs to re-examine
this change to a very long-standing
concept.
Business Property Relief (BPR) and
Agricultural Property Relief (APR) were
introduced in the UK to address specific
economic and tax challenges, fostering
business continuity and agricultural
productivity.
1. BUSINESS PROPERTY RELIEF (BPR):
Introduced: 1976 as part of the Capital
Transfer Tax regime (which later evolved
into Inheritance Tax in 1986).
Purpose: To prevent the forced sale of
family businesses upon inheritance due to
significant tax liabilities. The government
recognised that applying Inheritance Tax
to active businesses could hinder their
continuity, disrupt employment, and harm
the economy.
2. AGRICULTURAL PROPERTY RELIEF
(APR):
Introduced: 1925 under earlier estate tax
legislation and later incorporated into the
Inheritance Tax framework
Purpose: To encourage agricultural
productivity by allowing farms to be
passed down without the burden of
heavy taxes. The relief acknowledged that
agriculture was vital to food security and
rural economies.
"The issue here being
the encouragement
to the next generation
to make the most of
previous generations
hard work and maintain
the farm or business
serving society in so
many ways"
KEY OBJECTIVES
• Preserving Family Businesses: Both
reliefs were designed to ease the
transition of assets across generations,
ensuring that family-owned businesses
and farms could remain operational.
• Avoiding Asset Liquidation: They helped
prevent scenarios where families might
need to sell business or farm assets to pay
Inheritance Tax.
• Economic Stability: By supporting small
and medium-sized enterprises (SMEs)
and agricultural enterprises, these reliefs
aimed to protect employment, innovation,
and rural livelihoods.
Over time, both reliefs have become
central to UK tax policy, supporting
entrepreneurs and farmers while
promoting long-term economic
sustainability. The issue here being the
encouragement to the next generation to
make the most of previous generations
hard work and maintain the farm or
business serving society in so many ways.
The changes to this relief in our recent
budget has simply destroyed this key
incentive as the next generations are not
always keen to follow their parents by
stepping into their shoes, however this
significant taxation advantage was a key
encouragement.
What we shall now see are increased
liquidations as businesses are closed
before retirement and the investments
redeployed and the country moving
a further step away from the creation
of middle-sized businesses as a result.
There is also potentially the opportunity
for amalgamation and consolidation
of businesses which has now greatly
increased, and this will require the funding
process that biz4Biz alongside BizCrunch
have suggested to government they need
to provide.
biz4Biz.org
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