Chancellor Rachel Reeves Faces Legal Battle as Farmers and Business Owners Challenge Inheritance Tax Reforms at the Royal Courts of Justice in London

A major legal battle kicked off today at the Royal Courts of Justice, as farmers and business owners rallied against the government’s controversial inheritance tax reforms.

The High Court heard claims that Chancellor Rachel Reeves acted unlawfully by failing to properly consult stakeholders before imposing significant tax changes on family-run farms and businesses.

Tractors lined the streets outside the central London court, while protestors held up banners declaring: “Keep farms & firms in the family,” signaling the high level of public frustration with the policy.

The Heart of the Dispute: Consultation Claims

Lawyers for the claimants argued that the Chancellor broke a long-standing government promise by not conducting consultations in accordance with established procedures.

The reforms, first announced in October 2024, sought to alter agricultural property relief (APR) and business property relief (BPR), potentially exposing family-run enterprises to inheritance tax of 20% on assets over £1 million starting this year.

Steve Perez, CEO of the Global Brands Group, which produces drinks like VK and Hooch, criticized the approach as poorly planned.

“This came out of the blue. I think they don’t understand the impacts,” he told the court, highlighting widespread concern among business owners.

Policy U-Turn and Continuing Concerns

Facing backlash, including farmers driving tractors through central London in protest, the Chancellor made a partial U-turn just before Christmas 2024.

The inheritance tax threshold was raised to £2.5 million, or £5 million for married couples.

Despite this adjustment, family farms and businesses remain exposed to inheritance tax, leaving many stakeholders uneasy about their long-term financial security.

Claimants Speak Out

Cambridgeshire farmers George Martin, 74, and his son Tom Martin, 45, joined the case through the Farmers and Businesses for Fair Tax Relief campaign group.

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They argue that Treasury documents, including the “Tax Consultation Framework” from March 2011, indicate the government promised proper consultation on major tax changes—something they say never occurred.

Tom Martin emphasized the stakes for the wider community: “This legal case matters to everyone affected by the proposed tax changes.

By skipping proper consultation, the government deliberately denied us the chance to influence the policy.

We hope the court will hold them to their word.”

Legal Perspective: Consultation is Crucial

James Austen, partner at Collyer Bristow representing the claimants, told the court: “Tax consultations are essential to avoid damaging unintended consequences and embarrassing U-turns.

The government’s refusal to engage properly leaves farms and businesses uncertain about their futures, forcing us to seek legal redress.”

Alexander Marcham, managing director at Alvarez & Marsal, added: “Many affected farms and businesses have been built over generations.

Implementing tax changes without proper consultation disrupts succession planning and long-term investment.

The court’s ruling will set an important precedent for policy transparency and fairness.”

Impact and Consequences

If the High Court finds in favor of the claimants, the government may be forced to revise its consultation process or delay the tax changes.

This could affect hundreds of family businesses and farms, potentially reshaping inheritance planning across the UK.

The case also highlights the ongoing tension between government fiscal policy and stakeholder engagement.

What’s Next?

The judicial review is scheduled to continue over the next two days.

Lawyers expect further testimony from affected business owners and financial experts, which could influence the court’s decision on whether the Chancellor acted unlawfully in bypassing proper consultation procedures.

Summary

Farmers and business owners are challenging Chancellor Rachel Reeves in the High Court over inheritance tax changes that threaten family-run enterprises.

The claimants argue the government failed to consult as promised, leaving them with legal recourse to challenge the policy.

Despite a partial U-turn on tax thresholds, concerns over transparency and long-term impacts remain.

Bulleted Takeaways

• High Court hearing begins over inheritance tax changes affecting family farms and businesses.
• Claimants argue Rachel Reeves acted unlawfully by skipping proper consultation.
• Tax reforms initially exposed assets over £1 million to 20% inheritance tax; partial U-turn raised threshold to £2.5 million.
• Protestors and farmers staged public demonstrations outside the Royal Courts of Justice.
• Outcome could influence government consultation processes and long-term succession planning for UK farms and businesses.