Tractors score a victory: Inheritance tax U-turn shows how enfeebled the Chancellor has become, says ALEX BRUMMER
The wisdom has long been that Budget day is an excellent opportunity to bury bad corporate happenings. Christmas Eve is the best day for dodgy firms to hold their annual general meetings.
There are no papers on Christmas Day, although in the online world there are fewer places to hide.
The Government’s U-turn on inheritance tax relief for family firms and businesses takes advantage of a publication black hole.
Parliament isn’t sitting so Left-wing backbenchers will doubtless be too engaged in soup kitchen volunteering to kick up a fuss.
The choice to more than double the relief threshold for farms and small firms to £2.5million is a significant change from the policy first enumerated in the £40billion tax-raising 2024 Budget and reiterated a month ago.
The Chancellor Rachel Reeves had no fingerprints on a welcome announcement. A press release came from gov.uk rather than HMRC or the Treasury.
Climbdown: Chancellor Rachel Reeves has u-turned on plans to impose inheritance tax on farms worth upwards of £1million, raising the threshold to £2.5m instead
The hapless Environment Secretary Emma Reynolds was given the honour of justifying the change after 14 months of robust protests by tractor-driving farmers.
It will be seen by other groups, such as non-domiciled individuals, as a way of reversing unwanted tax policies but one suspects parades of chauffeur-driven Bentleys and Chelsea tractors might not attract the same public sympathy.
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The National Farmers’ Union was delighted by the change describing it as a victory for ‘common sense’.
The break also helps small businesses on whose behalf these pages have relentlessly campaigned. The reaction from this group was not one of universal welcome.
It was argued only micro-firms rather than bigger family and tech firms, attracting bigger valuations, would benefit.
The change, similar to the reversal on the winter fuel allowance and the backtrack on welfare reforms in March, shows an enfeebled Chancellor. She looks sadly out of touch when setting tax policy.
Deal bonanza
At a New Year’s Day gathering a couple of years back, an acquaintance working on mergers and acquisitions (M&A) at one of Wall Street’s largest banks invited me to look at a text from his chief executive.
It bluntly stated that the recipient’s bonus pool was empty and there was no better time than January 1 to start bringing in the deals.
The brutality, in the high-octane world of investment banking, is that however good a job done in the previous year, it is your duty to get off to a flying start.
This holiday season there will be a great rush to get deals done before the calendar moves on. The data shows that 2025 has been a bumper year for M&A, with Dealogic calculating some $463.6billion(£343.6billion) of M&A deals, 30 per cent up on 2024.
Here in Britain the latest transaction to emerge is Nelson Peltz’s £5billion assault on City fund manager Janus Henderson. The deal is outside Peltz and his Trian fund’s normal comfort zone.
What is appalling is the way the Janus Henderson board has rolled over. It doesn’t say much for the skills of active managers who ought to be fighting for independence.
The biggest deal on the horizon is the contested takeover of entertainment giant Warner Bros Discovery.
So far, its board has favoured being absorbed by Netflix rather than Paramount, backed by Larry Ellison’s Oracle billions. Paramount ought to be home and dry now that Ellison has promised to guarantee the finance.
But Warner Bros is still hesitating. Whatever happens, the biggest winner will be the Wall Street advisers.
Shareholders should bear in mind how big media deals, such as AOL Time Warner in 2000 and Comcast Sky in 2018, gobbled up tens of billions of dollars of goodwill.
Those are not great precedents.
Spring break
When the International Monetary Fund speaks, Britain listens.
In its annual inspection the Washington-based financial marshal argued it was time for the Chancellor to end the practice of multiple financial events a year and hold firm with one Budget.
So instead of months of speculation running up to March 2026, the public should expect economic and fiscal revisions from the Office for Budget Responsibility in March but no mid-course corrections.
Phew!
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