New analysis reveals that changes announced in Rachel Reeves’s Budget could result in an additional 14,500 farmers becoming subject to inheritance tax (IHT), as thresholds fail to keep pace with inflation, as reported by The Telegraph.
The Central Association of Agricultural Valuers (CAAV) estimates that the number of farming estates affected by the revised inheritance tax rules could increase by nearly 20%. Jeremy Moody of the CAAV projected that 75,000 farming taxpayers would face IHT over the next three decades, equating to 2,500 farmers annually – far exceeding the Treasury’s estimate of 500 estates per year.
Under the current system, farmers benefit from up to 100% inheritance tax relief on land, buildings, equipment, and livestock through agricultural property relief (APR) and business property relief (BPR).
However, from April 2026, the Budget introduces a combined threshold of £1m for APR and BPR, with any value above this threshold subject to a 20% IHT rate.
Mr. Moody cautioned that the actual number of affected estates could rise significantly if IHT thresholds remain static amid increasing land and business values. He noted that by 2036, an additional 14,500 farming estates could surpass the £1m threshold and become liable for the new tax.
The decision to overhaul inheritance tax relief for farmers has sparked significant backlash from farming bodies, who argue that the sector is particularly vulnerable to a “stealth tax” effect. Without adjustments to account for rising land and business values, thousands of farms could newly fall under the IHT regime upon the owner’s death.
The Government insists its reform balances fairness with funding public services, claiming that the changes will impact around 500 estates annually and provide these estates with favourable terms, including a 10-year interest-free repayment period.
Critics, however, argue that the Treasury’s estimates fail to account for the broader scope of the farming sector and rising valuations, which could push far more estates above the tax-free threshold in coming years.
