04 Nov 2025
The Chartered Institute of Taxation (CIOT) has urged the government to implement a transitional rule to allow older farmers and other business owners to gift assets to the younger generation free of Inheritance Tax (IHT) before changes take effect in April 2026.
Current rules incentivise farmers to keep their farms until their deaths, the CIOT stated in a submission to an inquiry by the House of Lords. Its proposed changes would reverse these incentives and promote lifetime giving.
However, for older farmers where there is a risk that they could die within seven years of making a lifetime gift (but after April 2026), the gift would be ineffective for IHT purposes. According to the CIOT, a 'cliff edge' is thus created on 6 April 2026.
It has suggested that the risk could be mitigated by amending legislation so that any gifts of relievable assets made between 30 October 2024 and 5 April 2026 would continue to benefit from the old rules even if the farmer died within seven years.
'We are concerned that bringing in changes to agricultural and business reliefs with a cliff-edge date of 6 April 2026 is leading to great anxiety among older clients as they are unlikely to survive seven years and therefore are unlikely to see making gifts as a solution,' said John Barnett, Vice President of the CIOT.
'We think that there is a straightforward and relatively low-cost transitional rule that could address this concern: allowing gifts made between now and April to continue to qualify for the 100% relief currently available. While this is not a complete solution to the problem – there may be some for whom making a gift is impractical or impossible if they have lost capacity – it should significantly reduce the risk as it gives a viable and straightforward alternative.'