Labour’s inheritance tax shake-up just got a date with a judge. The High Court has fast-tracked a legal challenge over the government’s controversial changes to agricultural property relief (APR) and business property relief (BPR)—reliefs that have shielded family farms and businesses from hefty inheritance tax bills for decades.
The policy u-turn in December, which lifted the threshold from £1m to £2.5m after months of rural backlash, hasn’t quieted the critics. Now, two farmers and a coalition of business groups are arguing the government rushed the reforms through without proper consultation. And the court’s taking it seriously enough to schedule a rare “rolled-up” hearing for February or March 2026.
Here’s why this inheritance tax battle matters—and what it could mean for family businesses across the UK.
What’s the Legal Challenge About?
Farmers Thomas Martin and George Martin, alongside campaign group Farmers and Businesses for Fair Tax Relief and professional services firm Alvarez & Marsal, are seeking a judicial review of Labour’s inheritance tax reforms.
Their core argument? The government only ran a limited technical consultation on a narrow slice of the changes—and that falls short of legal standards. According to the claimants, this approach breached public law duties and ignored longstanding consultation principles for major policy shifts.
The timing’s tight. The Finance Bill is already at Committee stage, so the court can’t halt the law or force a new consultation. Instead, the claimants want a formal declaration that Labour’s process was unlawful—a symbolic but significant legal rebuke.
Why the High Court Granted an Urgent Hearing
Mrs Justice Lang ordered the case to proceed as a “rolled-up” hearing despite what she called “regrettable administrative delays” by court staff. These hearings are exceptionally rare, reserved for cases of critical importance.
James Austen, partner at Collyer Bristow representing the claimants, emphasised just how unusual this is. The court’s decision to fast-track the case signals that the legal questions around consultation standards and public law duties are being taken seriously.
Adding another layer, the Speaker of the House of Commons has been granted permission to intervene as an interested party. Why? To address matters of Parliamentary privilege and the separation of powers—constitutional questions that could have implications beyond this single case.
Labour’s Inheritance Tax Changes: A Quick Recap
The reforms target two key reliefs that have historically protected family wealth from inheritance tax:
- Agricultural Property Relief (APR): Protects farmland and agricultural assets
- Business Property Relief (BPR): Shields family business assets from IHT
Initially, Labour raised the threshold to £1m, triggering fierce pushback from rural communities and business owners. After a year of pressure, the government partially reversed course in December, lifting the threshold to £2.5m effective April 2026.
But critics argue the damage is done. The policy still represents one of the biggest shifts in UK inheritance tax policy in decades, and many family businesses say they need certainty, not last-minute adjustments.
What Business Owners and Farmers Are Saying
Marvin Rust, head of Alvarez & Marsal tax EMEA, didn’t mince words: “We work with many family businesses and farms who need certainty. Limiting longstanding inheritance tax reliefs is an important legislative change, which was introduced without proper consultation, contrary to well-established principles. That is not how policy of this magnitude should be made.”
Thomas Martin echoed the sentiment: “I look forward to taking this important case to court to ensure due process is followed.”
The frustration centres on process as much as policy. Even those who might accept higher inheritance tax thresholds are questioning whether the government followed proper consultation procedures for such a major reform.
What Happens Next?
The rolled-up hearing is scheduled for two days in February or March 2026. While the court can’t stop the law from taking effect, a declaration of unlawfulness could force the government to revisit its approach to major tax reforms.
For family businesses and farms, the immediate concern is certainty. The April 2026 implementation date is looming, and many are scrambling to restructure their affairs or seek professional advice on inheritance tax planning.
If the claimants succeed, it could set a precedent for how governments must consult on significant changes to longstanding tax reliefs. And that matters far beyond agricultural property relief or business property relief—it could influence how future inheritance tax policy is made.
The Bottom Line
Labour’s inheritance tax overhaul has gone from policy announcement to courtroom drama. The High Court’s decision to grant an urgent hearing suggests the legal questions around consultation procedures are serious enough to warrant immediate attention.
Whether you’re running a family farm, managing a business, or just watching UK tax policy unfold, this case is worth following. The outcome could reshape how governments approach major inheritance tax reforms—and whether they can rush through changes without proper consultation.
Want to stay ahead of UK tax policy changes? Keep an eye on this case and consider speaking with a tax adviser if inheritance tax planning affects your family business or agricultural assets.
FAQ
Q1: What is agricultural property relief (APR)?
A: Agricultural property relief is an inheritance tax relief that reduces or eliminates IHT on farmland and agricultural assets when they’re passed to heirs. It’s designed to prevent family farms from being broken up to pay tax bills.
Q2: What’s the new inheritance tax threshold for family businesses?
A: After Labour’s December U-turn, the threshold for agricultural property relief and business property relief increased to £2.5m from the initially proposed £1m. The changes take effect in April 2026.
Q3: Can the High Court stop Labour’s inheritance tax reforms?
A: No. Since the Finance Bill is already at Committee stage, the court cannot halt the law or order a new consultation. However, the claimants are seeking a formal declaration that the government’s process was unlawful.
Q4: What is a “rolled-up” hearing?
A: A rolled-up hearing is an exceptionally rare procedure where the court combines the permission stage and full hearing into one. It’s typically reserved for cases of critical importance that need urgent resolution.
Q5: How does this affect inheritance tax planning?
A: If you own a family business or farm, the April 2026 implementation date means you should review your inheritance tax planning now. The legal challenge won’t delay the reforms, so professional tax advice is essential for anyone affected by the changes.
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Effective Date: 15th July 2025
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