Written questions by Cross.

What recent analysis her Department has undertaken on the regional distribution of revenues from the abolition of the Furnished Holiday Lettings tax regime; and what proportion of this revenue is expected to be raised in Scotland.’

The Government will abolish the Furnished Holiday Lettings (FHL) tax regime from April 2025. The abolition of the FHL regime will raise £190m by 2029-30, which will help support public services across the United Kingdom, including in Scotland.

Food and Rural Affairs, pursuant to the Answer of 2 December 2024 to Question 15988 on Agriculture: Inheritance Tax, on what evidential basis his Department (a) determined that 73% of claims will be for less than £1 million and (b) used to identify the proportion of the remaining 27% of affected estates that are active family-run farms; and what information his Department holds on the proportion of agricultural land sales purchased by (i) large corporations and (ii) investment firms in (A) Scotland and (B) the UK in each of the last five years.

As referenced in the answer to PQ 15988, 73 per cent (1,264 of 1,730) of claims by estates for agricultural property relief in 2021-22 were for properties valued below £1 million. This is calculated using a table published by HM Treasury using HMRC data in Summary of reforms to agricultural property relief and business property relief, statistical annex (30 October 2024). According to further analysis of HMRC claims data published by HM Treasury, in 2026/27 the reforms are expected to result in up to 520 of the estates claiming agricultural property relief, including those also claiming business property relief, paying more inheritance tax. This means almost three-quarters (1,260 of 1,780) of estates claiming agricultural property relief, including those that also claim for business property relief, will not pay any more tax as a result of the changes in 2026-27, based on the latest available data. See the Chancellor of the Exchequer’s letter to the Chair of the Treasury Select Committee, Dame Meg Hillier MP: committees.parliament.uk/publications/45691/documents/226235/default/. Defra has not made an assessment of the proportion of farming businesses that are “family-run farms”. Defra does not hold information on the purchasers of agricultural land. The Government’s assessment relates to claims for agricultural property relief and business property relief. The qualifying conditions for these reliefs are set out in Part 5 of the Inheritance Tax Act 1984.

What assumptions on the timing of intergenerational farm transfers were used in forecasts of farms affected by changes to (a) Agricultural Property Relief and (b) Business Property Relief.

The Chancellor wrote to the Chair of the Treasury Select Committee about the reforms to agricultural and business property reliefs announced at the 2024 Autumn Budget: https://committees.parliament.uk/publications/45691/documents/226235/default/. The UK Government’s analysis is based on the number of estates expected to pay more inheritance tax rather than the number of farms or businesses affected. This is because inheritance tax is a wealth transfer tax on the estate (the property, money, and possessions) of someone who has died. The number of claims for these reliefs, meaning how many estates would be impacted by this change, is affected by many things such as: who owns the business; the nature of that ownership; how many owners there are; the level of debt; and how they plan their affairs. The UK Government remains firmly of the view that claims data is the correct way to understand an inheritance tax liability. The reforms are expected to result in up to around 520 estates claiming agricultural property relief, including those that also claim business property relief, paying more inheritance tax in 2026-27. Almost three-quarters of estates claiming agricultural property relief, including those that also claim for business property relief, would not pay more tax in 2026-27. Around 1,500 estates claiming only business property relief are expected to be affected in 2026-27, with around 1,000 of these holding shares designated as “not listed” on the markets of recognised stock exchanges, such as the Alternative Investment Market. The remaining 500 estates will include business assets from sectors across the economy that are eligible for business property relief. These reforms mean that around three-quarters of estates claiming business property relief in 2026-27 (excluding those only relating to holding shares designated as “not listed” on the markets of recognised stock exchanges) will not pay more inheritance tax in 2026-27. The costing for this tax change was certified as ‘reasonable and central’ by the Office for Budget Responsibility (OBR) at Autumn Budget 2024. The OBR has published more detail about the assumptions underpinning the costing here: https://obr.uk/download/october-2024-economic-and-fiscal-outlook-costing-of-changes-to-agricultural-and-business-property-relief/?tmstv=1738846567. In accordance with standard practice, a tax information and impact note will be published alongside the draft legislation before the relevant Finance Bill.

What assumptions on marital status were used in forecasts of farms impacted by changes to (a) Agricultural Property Relief and (b) Business Property Relief.

The Chancellor wrote to the Chair of the Treasury Select Committee about the reforms to agricultural and business property reliefs announced at the 2024 Autumn Budget: https://committees.parliament.uk/publications/45691/documents/226235/default/. The UK Government’s analysis is based on the number of estates expected to pay more inheritance tax rather than the number of farms or businesses affected. This is because inheritance tax is a wealth transfer tax on the estate (the property, money, and possessions) of someone who has died. The number of claims for these reliefs, meaning how many estates would be impacted by this change, is affected by many things such as: who owns the business; the nature of that ownership; how many owners there are; the level of debt; and how they plan their affairs. The UK Government remains firmly of the view that claims data is the correct way to understand an inheritance tax liability. The reforms are expected to result in up to around 520 estates claiming agricultural property relief, including those that also claim business property relief, paying more inheritance tax in 2026-27. Almost three-quarters of estates claiming agricultural property relief, including those that also claim for business property relief, would not pay more tax in 2026-27. Around 1,500 estates claiming only business property relief are expected to be affected in 2026-27, with around 1,000 of these holding shares designated as “not listed” on the markets of recognised stock exchanges, such as the Alternative Investment Market. The remaining 500 estates will include business assets from sectors across the economy that are eligible for business property relief. These reforms mean that around three-quarters of estates claiming business property relief in 2026-27 (excluding those only relating to holding shares designated as “not listed” on the markets of recognised stock exchanges) will not pay more inheritance tax in 2026-27. The costing for this tax change was certified as ‘reasonable and central’ by the Office for Budget Responsibility (OBR) at Autumn Budget 2024. The OBR has published more detail about the assumptions underpinning the costing here: https://obr.uk/download/october-2024-economic-and-fiscal-outlook-costing-of-changes-to-agricultural-and-business-property-relief/?tmstv=1738846567. In accordance with standard practice, a tax information and impact note will be published alongside the draft legislation before the relevant Finance Bill.

How many farms impacted by changes to (a) Agricultural Property Relief and (b) Business Property Relief she expects to have previously claimed solely for Business Property Relief.

The Chancellor wrote to the Chair of the Treasury Select Committee about the reforms to agricultural and business property reliefs announced at the 2024 Autumn Budget: https://committees.parliament.uk/publications/45691/documents/226235/default/. The UK Government’s analysis is based on the number of estates expected to pay more inheritance tax rather than the number of farms or businesses affected. This is because inheritance tax is a wealth transfer tax on the estate (the property, money, and possessions) of someone who has died. The number of claims for these reliefs, meaning how many estates would be impacted by this change, is affected by many things such as: who owns the business; the nature of that ownership; how many owners there are; the level of debt; and how they plan their affairs. The UK Government remains firmly of the view that claims data is the correct way to understand an inheritance tax liability. The reforms are expected to result in up to around 520 estates claiming agricultural property relief, including those that also claim business property relief, paying more inheritance tax in 2026-27. Almost three-quarters of estates claiming agricultural property relief, including those that also claim for business property relief, would not pay more tax in 2026-27. Around 1,500 estates claiming only business property relief are expected to be affected in 2026-27, with around 1,000 of these holding shares designated as “not listed” on the markets of recognised stock exchanges, such as the Alternative Investment Market. The remaining 500 estates will include business assets from sectors across the economy that are eligible for business property relief. These reforms mean that around three-quarters of estates claiming business property relief in 2026-27 (excluding those only relating to holding shares designated as “not listed” on the markets of recognised stock exchanges) will not pay more inheritance tax in 2026-27. The costing for this tax change was certified as ‘reasonable and central’ by the Office for Budget Responsibility (OBR) at Autumn Budget 2024. The OBR has published more detail about the assumptions underpinning the costing here: https://obr.uk/download/october-2024-economic-and-fiscal-outlook-costing-of-changes-to-agricultural-and-business-property-relief/?tmstv=1738846567. In accordance with standard practice, a tax information and impact note will be published alongside the draft legislation before the relevant Finance Bill.

What criteria on (a) total acreage, (b) agricultural land usage, (c) livestock numbers and (d) Rural Payments Agency claim data were used to define an agricultural holding for impact assessments of changes to (i) Agricultural Property Relief and (ii) Business Property Relief.

The Chancellor wrote to the Chair of the Treasury Select Committee about the reforms to agricultural and business property reliefs announced at the 2024 Autumn Budget: https://committees.parliament.uk/publications/45691/documents/226235/default/. The UK Government’s analysis is based on the number of estates expected to pay more inheritance tax rather than the number of farms or businesses affected. This is because inheritance tax is a wealth transfer tax on the estate (the property, money, and possessions) of someone who has died. The number of claims for these reliefs, meaning how many estates would be impacted by this change, is affected by many things such as: who owns the business; the nature of that ownership; how many owners there are; the level of debt; and how they plan their affairs. The UK Government remains firmly of the view that claims data is the correct way to understand an inheritance tax liability. The reforms are expected to result in up to around 520 estates claiming agricultural property relief, including those that also claim business property relief, paying more inheritance tax in 2026-27. Almost three-quarters of estates claiming agricultural property relief, including those that also claim for business property relief, would not pay more tax in 2026-27. Around 1,500 estates claiming only business property relief are expected to be affected in 2026-27, with around 1,000 of these holding shares designated as “not listed” on the markets of recognised stock exchanges, such as the Alternative Investment Market. The remaining 500 estates will include business assets from sectors across the economy that are eligible for business property relief. These reforms mean that around three-quarters of estates claiming business property relief in 2026-27 (excluding those only relating to holding shares designated as “not listed” on the markets of recognised stock exchanges) will not pay more inheritance tax in 2026-27. The costing for this tax change was certified as ‘reasonable and central’ by the Office for Budget Responsibility (OBR) at Autumn Budget 2024. The OBR has published more detail about the assumptions underpinning the costing here: https://obr.uk/download/october-2024-economic-and-fiscal-outlook-costing-of-changes-to-agricultural-and-business-property-relief/?tmstv=1738846567. In accordance with standard practice, a tax information and impact note will be published alongside the draft legislation before the relevant Finance Bill.

What assessment she has made of the potential impact of changes to (a) Agricultural Property Relief and (b) Business Property Relief on (i) food security, (ii) agricultural investment and (iii) the viability of family-run farms.

The Chancellor wrote to the Chair of the Treasury Select Committee about the reforms to agricultural and business property reliefs announced at the 2024 Autumn Budget: https://committees.parliament.uk/publications/45691/documents/226235/default/. The UK Government’s analysis is based on the number of estates expected to pay more inheritance tax rather than the number of farms or businesses affected. This is because inheritance tax is a wealth transfer tax on the estate (the property, money, and possessions) of someone who has died. The number of claims for these reliefs, meaning how many estates would be impacted by this change, is affected by many things such as: who owns the business; the nature of that ownership; how many owners there are; the level of debt; and how they plan their affairs. The UK Government remains firmly of the view that claims data is the correct way to understand an inheritance tax liability. The reforms are expected to result in up to around 520 estates claiming agricultural property relief, including those that also claim business property relief, paying more inheritance tax in 2026-27. Almost three-quarters of estates claiming agricultural property relief, including those that also claim for business property relief, would not pay more tax in 2026-27. Around 1,500 estates claiming only business property relief are expected to be affected in 2026-27, with around 1,000 of these holding shares designated as “not listed” on the markets of recognised stock exchanges, such as the Alternative Investment Market. The remaining 500 estates will include business assets from sectors across the economy that are eligible for business property relief. These reforms mean that around three-quarters of estates claiming business property relief in 2026-27 (excluding those only relating to holding shares designated as “not listed” on the markets of recognised stock exchanges) will not pay more inheritance tax in 2026-27. The costing for this tax change was certified as ‘reasonable and central’ by the Office for Budget Responsibility (OBR) at Autumn Budget 2024. The OBR has published more detail about the assumptions underpinning the costing here: https://obr.uk/download/october-2024-economic-and-fiscal-outlook-costing-of-changes-to-agricultural-and-business-property-relief/?tmstv=1738846567. In accordance with standard practice, a tax information and impact note will be published alongside the draft legislation before the relevant Finance Bill.

What assessment she has made of the potential impact of (a) changes to (i) Agricultural Property Relief and (ii) Business Property Relief and (b) interest rates on (A) family farm succession planning and (B) food security.

The Chancellor wrote to the Chair of the Treasury Select Committee about the reforms to agricultural and business property reliefs announced at the 2024 Autumn Budget: https://committees.parliament.uk/publications/45691/documents/226235/default/. The UK Government’s analysis is based on the number of estates expected to pay more inheritance tax rather than the number of farms or businesses affected. This is because inheritance tax is a wealth transfer tax on the estate (the property, money, and possessions) of someone who has died. The number of claims for these reliefs, meaning how many estates would be impacted by this change, is affected by many things such as: who owns the business; the nature of that ownership; how many owners there are; the level of debt; and how they plan their affairs. The UK Government remains firmly of the view that claims data is the correct way to understand an inheritance tax liability. The reforms are expected to result in up to around 520 estates claiming agricultural property relief, including those that also claim business property relief, paying more inheritance tax in 2026-27. Almost three-quarters of estates claiming agricultural property relief, including those that also claim for business property relief, would not pay more tax in 2026-27. Around 1,500 estates claiming only business property relief are expected to be affected in 2026-27, with around 1,000 of these holding shares designated as “not listed” on the markets of recognised stock exchanges, such as the Alternative Investment Market. The remaining 500 estates will include business assets from sectors across the economy that are eligible for business property relief. These reforms mean that around three-quarters of estates claiming business property relief in 2026-27 (excluding those only relating to holding shares designated as “not listed” on the markets of recognised stock exchanges) will not pay more inheritance tax in 2026-27. The costing for this tax change was certified as ‘reasonable and central’ by the Office for Budget Responsibility (OBR) at Autumn Budget 2024. The OBR has published more detail about the assumptions underpinning the costing here: https://obr.uk/download/october-2024-economic-and-fiscal-outlook-costing-of-changes-to-agricultural-and-business-property-relief/?tmstv=1738846567. In accordance with standard practice, a tax information and impact note will be published alongside the draft legislation before the relevant Finance Bill.

What assessment her Department has made of the potential impact of changes in tax liabilities and reliefs on small-scale furnished holiday let operators transitioning to long-term residential letting; and what the difference in tax relief will be between (a) the current Furnished Holiday Lettings tax regime and (b) the standard residential letting arrangements from April 2025.

The Government will abolish the Furnished Holiday Lettings (FHL) tax regime from April 2025. The FHL tax regime has created a distortion that favours short-term holiday lets over longer-term rentals. Abolishing it will equalise the tax treatment of FHL and non-FHL landlords’ income and gains, making the tax system fairer. Tax reliefs will still be available to individuals providing furnished holiday letting services, including mortgage interest relief at 20 per cent and relief for the replacement of domestic items. These reliefs will be at the same level as those available to landlords who provide long-term residential lets.

With reference to the policy paper entitled Abolition of the furnished holiday lettings tax regime, updated on 7 November 2024, on what evidential basis her Department determined that the furnished holiday let tax regime created market distortions in relation to (a) property investment patterns and (b) tax advantages.

The Government will abolish the Furnished Holiday Lettings (FHL) tax regime from April 2025.The FHL tax regime has created a distortion that favours short-term holiday lets over longer-term rentals, by providing a tax incentive to invest in and provide the former over the latter. Abolishing the regime will remove this incentive by equalising the tax treatment of FHL and non-FHL landlords’ income and gains.

What information her Department holds on the total value of tax relief claimed under the furnished holiday let tax regime in (a) Scotland and (b) the UK in the 2023-24 financial year.

HMRC does not hold data on the number of furnished holiday let properties registered for tax purposes. Landlords are not required to register individual properties, or to declare the number of properties that they let. Furnished holiday lettings currently have access to several tax reliefs that non-FHL property businesses do not, such as Business Asset Disposal relief. They also currently receive more generous treatment on finance cost expenses, as they are not subject to the finance cost restriction, and are able to claim capital allowances. However, they also have restrictions on losses which can only be used against profits from the same FHL business and not other property profits, which in some cases will mean they pay more tax as a result of the regime. The most recent estimate on the overall amount of tax relieved as a result of the regime in 2023-24 was calculated at Autumn Budget 2024, and estimated the total tax relief in that year to be £165m, rounded to the nearest £5m. This figure is for the whole of the UK. It is not possible to identify FHL properties located in Scotland separately to the rest of the UK. This estimate was based on tax returns for 2022-23, and takes into account the various impacts of the regime mentioned above.

If she will publish an updated impact assessment of changes to Business Property Relief; and what assessment she has made of the potential impact of those changes on family-owned businesses in (a) Scotland and (b) the United Kingdom.

I refer the Honourable Member to the answers provided in response to her previous questions on this topic: https://questions-statements.parliament.uk/written-questions/detail/2024-11-25/15987/ and https://questions-statements.parliament.uk/written-questions/detail/2024-11-25/15989/. The Chancellor also recently wrote to the Chair of the Treasury Select Committee about the reforms to Agricultural and Business Property Relief, which may be of interest: https://committees.parliament.uk/publications/45691/documents/226235/default/. In accordance with standard practice, a tax information and impact note will be published alongside the draft legislation before the relevant Finance Bill.

What sectoral impact assessments her Department has conducted on changes to Business Property Relief since the Autumn Budget 2024; and whether she has made an estimate of the number of businesses at risk of closure following the introduction of those changes.

I refer the Honourable Member to the answers provided in response to her previous questions on this topic: https://questions-statements.parliament.uk/written-questions/detail/2024-11-25/15987/ and https://questions-statements.parliament.uk/written-questions/detail/2024-11-25/15989/. The Chancellor also recently wrote to the Chair of the Treasury Select Committee about the reforms to Agricultural and Business Property Relief, which may be of interest: https://committees.parliament.uk/publications/45691/documents/226235/default/. In accordance with standard practice, a tax information and impact note will be published alongside the draft legislation before the relevant Finance Bill.

Whether she has had discussions with (a) the Scottish Government and (b) local authorities in Scotland on the abolition of the Furnished Holiday Let tax regime.

The Government will abolish the Furnished Holiday Lettings (FHLs) tax regime from April 2025. This will equalise the tax treatment of FHL and non-FHL landlords’ income and gains.The Government wants to support visitor accommodation alongside housing for longer-term residents to rent or buy. Achieving this balance is crucial in supporting the tourism sector and many of the people that work in the sector, who need access to local housing.Draft legislation to abolish the FHL tax regime was published on 29 July 2024, providing businesses and other parties across the UK - including Scottish stakeholders - an opportunity to share their views on the changes with the Government.

What discussions she has had with (a) VisitScotland, (b) the Scottish Tourism Alliance and (c) other tourism sector representatives on the planned changes to the furnished holiday let tax regime.

The Government will abolish the Furnished Holiday Lettings (FHLs) tax regime from April 2025. This will equalise the tax treatment of FHL and non-FHL landlords’ income and gains.The Government wants to support visitor accommodation alongside housing for longer-term residents to rent or buy. Achieving this balance is crucial in supporting the tourism sector and many of the people that work in the sector, who need access to local housing.Draft legislation to abolish the FHL tax regime was published on 29 July 2024, providing businesses and other parties across the UK - including Scottish stakeholders - an opportunity to share their views on the changes with the Government.

What assessment she has made of the potential impact of changes to the Furnished Holiday Let tax regime on rural tourism businesses.

The Government will abolish the Furnished Holiday Lettings (FHLs) tax regime from April 2025. This will equalise the tax treatment of FHL and non-FHL landlords’ income and gains.The Government wants to support visitor accommodation alongside housing for longer-term residents to rent or buy. Achieving this balance is crucial in supporting the tourism sector and many of the people that work in the sector, who need access to local housing.Draft legislation to abolish the FHL tax regime was published on 29 July 2024, providing businesses and other parties across the UK - including Scottish stakeholders - an opportunity to share their views on the changes with the Government.

What data her Department holds on the number of furnished holiday let properties registered for tax purposes in (a) Scotland and (b) the UK as of January 2025.

HMRC does not hold data on the number of furnished holiday let properties registered for tax purposes. Landlords are not required to register individual properties, or to declare the number of properties that they let. Furnished holiday lettings currently have access to several tax reliefs that non-FHL property businesses do not, such as Business Asset Disposal relief. They also currently receive more generous treatment on finance cost expenses, as they are not subject to the finance cost restriction, and are able to claim capital allowances. However, they also have restrictions on losses which can only be used against profits from the same FHL business and not other property profits, which in some cases will mean they pay more tax as a result of the regime. The most recent estimate on the overall amount of tax relieved as a result of the regime in 2023-24 was calculated at Autumn Budget 2024, and estimated the total tax relief in that year to be £165m, rounded to the nearest £5m. This figure is for the whole of the UK. It is not possible to identify FHL properties located in Scotland separately to the rest of the UK. This estimate was based on tax returns for 2022-23, and takes into account the various impacts of the regime mentioned above.

What assessment her Department has made of the potential impact of planned changes to the furnished holiday let tax regime on tourism accommodation capacity in (a) rural Scotland and (b) the UK.

The Government will abolish the Furnished Holiday Lettings (FHLs) tax regime from April 2025. This will equalise the tax treatment of FHL and non-FHL landlords’ income and gains.The Government wants to support visitor accommodation alongside housing for longer-term residents to rent or buy. Achieving this balance is crucial in supporting the tourism sector and many of the people that work in the sector, who need access to local housing.Draft legislation to abolish the FHL tax regime was published on 29 July 2024, providing businesses and other parties across the UK - including Scottish stakeholders - an opportunity to share their views on the changes with the Government.

What steps his Department is taking to help prepare households for the closure of the radio teleswitch service in June 2025.

The Radio Teleswitch Service (RTS) is an industry-led initiative, with the switch-off being overseen by the energy industry, Energy UK and Ofgem. I recently met with Ofgem and Energy UK to discuss plans for the switch-off. I will continue to meet them regularly to track progress. Ofgem and Industry have convened a Taskforce involving energy suppliers, network operators, consumers groups and the Government, to coordinate activities to rapidly increase the pace of RTS replacements. A new campaign has launched highlighting the need for RTS customers to book a meter replacement as soon as their energy supplier contacts them.

Food and Rural Affairs, whether her Department is taking steps to (a) increase domestic recycling capacity for end-of-life vehicle tyres and (b) reduce reliance on exports.

This Government is committed to beginning the transition to a circular economy. The Secretary of State has asked his Department to work with experts from industry, academia, civil society, and the civil service to develop a Circular Economy Strategy for England and a series of roadmaps detailing the interventions that the Government will make on a sector-by-sector basis, supporting Government’s Missions to kickstart economic growth and make Britain a clean energy superpower. We will consider the evidence for action right across the economy and evaluate what further interventions may be needed as we develop the Circular Economy Strategy.