The Aberration of Inheritance Tax: A Policy in Need of Reform

There are taxes which are necessary, taxes which are irritating, and taxes which reveal something altogether more profound about the philosophy of the state. Inheritance tax belongs firmly to the last category.

It rests upon an increasingly fashionable proposition: that wealth which has already been earned, taxed, saved and preserved somehow acquires a new debt to the state merely because its owner has died.

I believe that proposition is fundamentally wrong.

Inheritance is not an aberration of capitalism, nor is the desire to leave something to one’s children an embarrassing relic of a less enlightened age. It is one of the most natural human impulses imaginable. Men and women work not merely for themselves but for their families. They build houses, businesses and farms in the hope that something of their labour will survive them.

Civilisation itself depends upon this instinct for continuity.

We plant trees beneath whose shade we know we shall never sit. We restore houses that will outlive us. We preserve paintings, books and furniture because we consider ourselves custodians rather than merely consumers. Above all, we try to leave our children something better than that which we ourselves inherited.

Yet modern European politics has developed an increasingly uneasy relationship with inheritance, accumulated capital and private property. In the name of equality, governments repeatedly treat continuity of ownership as though it were a social problem requiring correction.

Nowhere is the folly of this philosophy more apparent than in the treatment of the family farm.

A farm is not a bank account.

It is not a portfolio of shares that can conveniently be divided into ten thousand pieces and sold as required. It is a living economic and social organism: fields, woods, hedgerows, houses, barns, machinery, livestock and, above all, people.

A farm may have a considerable theoretical capital value while producing a remarkably modest annual return. The farmer whose land is valued at several million pounds is not necessarily a millionaire in any meaningful sense of the word. He may simply be the temporary custodian of valuable land which his family has farmed for generations and which he hopes his children will farm after him.

Britain’s inheritance-tax reforms have brought this contradiction dramatically into focus.

Since 6 April 2026, 100 per cent Agricultural and Business Property Relief has been limited to the first £2.5 million of combined qualifying assets for an individual. Above that level, qualifying property receives 50 per cent relief, producing an effective inheritance-tax rate of up to 20 per cent. Unused allowance may pass between spouses or civil partners, potentially increasing the combined allowance to £5 million before other applicable allowances are considered. The Government also permits qualifying liabilities to be paid in ten annual interest-free instalments.

These concessions are significant and ought to be acknowledged. Indeed, the Government estimates that approximately 85 per cent of estates claiming Agricultural Property Relief in 2026–27 will pay no additional inheritance tax as a consequence of the reforms.

But that does not answer the fundamental question.

Why should a genuine working farm be subjected to inheritance tax at all?

The question is not whether the threshold should be £1 million, £2.5 million or £10 million. The question is whether agricultural land being passed intact from one farming generation to another should be treated principally as taxable inherited wealth.

I believe it should not.

The distinction between a working farm and an investment asset is fundamental.

Imagine a family whose ancestors bought or assembled a farm generations ago. The land has risen enormously in nominal value, perhaps because of development pressure in the surrounding area. The family has not created that inflation. They have not sold the land. They may have no desire whatsoever to realise its market value.

They simply wish to continue farming it.

Why should the death of one generation give the state a claim which may eventually require part of that land to be sold?

The Government quite reasonably points out that the new regime protects the great majority of estates claiming Agricultural Property Relief and that the tax on qualifying agricultural assets can be spread over ten years.

But spreading a liability over ten years does not make the liability disappear.

For farms caught by the tax, the danger is obvious. If agricultural income cannot comfortably meet the instalments, capital may eventually have to be realised. A field is sold here, a cottage there, perhaps some woodland or another portion of the holding.

On paper, the farm survives.

In reality, something has been lost for ever.

This is how landscapes change—not necessarily through some dramatic act of destruction, but incrementally. A farm that has existed as a coherent unit for centuries can be divided within a generation. Land passes into different ownership. Development pressures increase. The economic viability of the remaining holding diminishes.

Britain’s countryside is not simply scenery. It is the accumulated result of centuries of human stewardship.

The hedgerows, stone walls, copses, lanes, pastures, woods and fields that we regard as quintessentially English are overwhelmingly part of a working landscape. Families have shaped and maintained them over generations.

If we value that landscape, we should value the continuity which created it.

I would go considerably further than merely restoring unlimited Agricultural Property Relief.

Britain should consider creating a special legal structure for genuine working farms: an agricultural heritage trust designed specifically to preserve agricultural holdings intact across generations.

A family choosing such protection would accept restrictions in return. The land could not simply be placed into the structure and sold for development the following year. Its principal purpose would have to remain agriculture, environmental stewardship or associated rural activity. There could be strict rules against artificial tax avoidance and provisions dealing with land that ceased genuinely to be agricultural.

But provided those conditions were respected, succession from one generation of custodians to another should not trigger inheritance tax upon the underlying agricultural estate.

The principle would be extraordinarily simple:

Preserve the farm, and the state preserves the exemption. Sell it for private enrichment or development, and the appropriate taxation becomes payable.

Such a system would distinguish between inheritance as speculation and inheritance as stewardship.

It would also encourage families to think in centuries rather than fiscal years.

That idea has become unfashionable in parts of contemporary Europe.

For much of Europe’s political establishment, accumulated private wealth is increasingly viewed less as evidence of independence, thrift or continuity than as a reservoir from which government may draw whenever additional revenue is required.

This philosophy is particularly pronounced on the political Left, where redistribution has long occupied a central place in economic thinking. Its advocates argue that inherited wealth perpetuates inequality and that taxing substantial estates helps finance public services and improve equality of opportunity.

That argument is coherent. I simply believe that, carried too far, it becomes destructive.

A society cannot endlessly penalise accumulation without eventually discouraging people from accumulating. It cannot make succession increasingly difficult while professing surprise that family businesses disappear. It cannot make the ownership and transmission of productive assets progressively more expensive and then complain that capital has become concentrated in large corporations, financial institutions and international investment funds.

And it cannot profess devotion to the European countryside while pursuing policies which make multigenerational stewardship of that countryside increasingly difficult.

This is one of the great contradictions of contemporary European politics.

We speak endlessly about sustainability while undermining continuity.

We subsidise environmental stewardship with one department of government while another taxes the succession of the families who have stewarded the same land for generations.

We lament the disappearance of independent shops, family businesses and small manufacturers while imposing regulatory and fiscal burdens that multinational corporations can absorb far more easily than families can.

We speak romantically about villages, local communities and rural traditions while constructing an economic environment in which the assets underpinning those communities become progressively harder to retain.

Europe should be asking itself what exactly it wishes to preserve.

Inheritance tax also suffers from another fundamental moral weakness: much of the property upon which it falls has already been acquired from taxed income.

The farmer paid tax. The businessman paid tax. The homeowner paid tax. They paid VAT when they consumed, stamp duties when appropriate, council tax or its equivalents, duties, levies and innumerable other charges throughout their lives.

Having fulfilled their obligations to the state while alive, why should their death create a further claim upon property they have chosen to leave to their families?

Defenders of inheritance tax correctly point out that, technically, this is not simply the same tax being levied twice. The taxable event is different.

Legally, that is true.

Morally, it is rather less persuasive.

The distinction also exposes another uncomfortable reality. Those possessing the greatest fortunes generally possess the greatest access to sophisticated professional advice. International families can relocate. Assets can be reorganised. Lifetime planning can be undertaken years in advance.

The people most exposed to inheritance tax are often those whose wealth cannot conveniently move: the family house, the private company, the workshop and, most conspicuously, the farm.

Land cannot move to Switzerland.

This should trouble anybody genuinely interested in fairness.

There is nothing economically inevitable about inheritance taxation. Several developed countries have abolished conventional inheritance or estate taxes, including Australia, Austria, Canada, Israel, New Zealand, Norway and Sweden, although their broader tax systems differ and some impose taxation at death through other mechanisms.

Sweden and Norway are particularly instructive. Neither can plausibly be characterised as countries which abandoned social welfare or public services because they abolished inheritance taxation.

They simply chose different ways of raising revenue.

And that is ultimately what inheritance tax represents: a political choice.

Europe could make another choice.

It could decide that productive capital should be encouraged to remain productive; that family businesses should be encouraged to remain in families; that farms should be encouraged to remain intact; and that individuals who spend their lives creating something should be encouraged to believe that their children may continue it.

This is not an argument for aristocratic privilege. It applies equally to the mechanic who wishes to leave his garage to his daughter, the restaurateur who wants his sons to continue the restaurant, the shopkeeper leaving a business to his children and the farmer hoping that a fourth generation will plough the same fields as the first.

Inheritance is not exclusively about wealth.

It is about continuity.

There is a dangerous tendency in modern politics to confuse equality with sameness and fairness with redistribution. They are not synonymous.

A society in which nobody can preserve anything because everything is eventually fragmented may ultimately be more equal. It will not necessarily be richer, freer, more beautiful or more humane.

Europe’s extraordinary civilisation was not built exclusively by governments. It was built by institutions and families capable of thinking beyond the span of an individual life: farms, businesses, universities, foundations, churches, charities, estates and innumerable private enterprises handed from one generation to another.

We should be extremely wary of a political philosophy which regards that continuity primarily as accumulated wealth waiting to be taxed.

The family farm provides the clearest test.

Where land remains genuinely agricultural, where a family continues to work or responsibly manage it, and where the holding is preserved rather than liquidated for speculative profit, the state should encourage its survival.

Place it in trust. Protect it. Impose conditions preventing abuse. Require responsible stewardship. But allow the farm to pass intact from generation to generation.

If one day the family decides to sell the land for development and realise the accumulated capital value, by all means let the taxman enter the conversation.

Until then, leave the fields alone.

For once they have been divided, developed and dispersed, no Chancellor of the Exchequer, no subsidy and no environmental initiative will reconstruct the countryside that taxation helped to dismantle.

We inherited that countryside from those who came before us.

The least we can do is ensure that there remains something worth inheriting by those who come after.