Farmers’ leaders have urged the Prime Minister to halt proposed changes to agricultural inheritance tax while consultations with the industry take place.
National Farmers’ Union (NFU) president Tom Bradshaw told MPs that farmers are prepared to collaborate with the government, suggesting there are “many ways” to make the policy “less bad”.
On Wednesday, protesters drove tractors through Westminster in opposition to the inheritance tax changes introduced in October’s Budget. Liberal Democrat leader Sir Ed Davey also called on the Prime Minister in Parliament to “change course and recognise the vital role that British family farms play”.
However, Labour leader Sir Keir Starmer argued that the “vast majority” of farmers would not be impacted by the reforms.
Robert Martin, national chairman of the Tenant Farmers Association, criticised the policy for failing to address loopholes, such as capital gains tax rollover relief, which could still allow wealthy individuals to benefit by purchasing farmland.
Dr. Arun Advani from the think tank CenTax said the measures would likely have only a limited effect on slowing land price inflation, as the 20% IHT rate remains favourable compared to other investments.
Stuart Maggs, head of tax at law firm Howes Percival, warned that agricultural estates typically yield only a 0.5% to 1% return, making the tax unaffordable for many farmers. He predicted widespread land sales and emphasised that farmers with limited planning time, such as those dying early or in old age, would be disproportionately affected.
During Prime Minister’s Questions, Sir Ed Davey called for a policy rethink, stating that the recent Budget risks being “the final blow” for struggling family farms.
Sir Keir Starmer responded by stating the government’s record £5 billion investment in farming over two years and argued that the £3 million threshold would exempt most farmers.
A spokesperson for the Prime Minister later reiterated there would be no changes to the policy, stating that the impact would be limited to “a small number of estates”.
The Department for Environment, Food and Rural Affairs highlighted £343 million in payments for nature-friendly farming activities benefiting over 31,000 farmers. The government unveiled plans for environmental land management schemes, rewarding farmers for initiatives like healthy soil management, river restoration, and habitat creation.
Farmers and industry leaders, however, continue to urge the government to pause and reassess the inheritance tax changes, stressing the potential impact on livelihoods and the agricultural heritage of the UK.
