Farmers Seek Consultation with Prime Minister on Inheritance Tax Reforms

Leaders representing farmers have called upon the prime minister to halt proposed alterations to agricultural inheritance tax until government ministers have engaged in discussions with them. Tom Bradshaw, president of the National Farmers’ Union (NFU), informed Members of Parliament that farmers were prepared to collaborate with the government, asserting that there were “many ways” to improve the policy, making it “less bad”. On Wednesday, demonstrators drove tractors through Westminster, conducting another protest against the Budget announced in October. Concurrently in the Commons, Liberal Democrat leader Sir Ed Davey appealed to the Prime Minister to “change course and recognise the vital role that British family farms play”. Conversely, Sir Keir Starmer maintained that the “vast majority” of farmers would remain unaffected by the impending tax adjustments. Following the Budget’s provisions, agricultural assets inherited with a value exceeding £1m, which were previously exempt, will become subject to inheritance tax (IHT) at a rate of 20% – half the standard rate – starting from April 2026. Additional allowances could enable a couple to transfer a farm valued up to £3m. However, numerous farmers contend that despite being rich in assets, such as their land and livestock, they lack sufficient cash, and these changes will compel them to sell off property to cover the tax liability. Farmers’ representatives appeared before MPs on the Commons environment, food and rural affairs committee on Wednesday. Mr Bradshaw advocated for tax reforms to concentrate on personal wealth rather than business wealth, a shift he claimed would lead to a “very different proposal than the one that’s on the table”. He conveyed to MPs, “Our position is: let’s work with you to get to an outcome that works for all rather than the blunt instrument that we have today.” He became visibly emotional when discussing instances of farmers taking their own lives. “No policy should ever be published that has that unintended side effect. It’s not money. This is a lifetime of work, it’s the heritage and the custodianship of their farm.” Victoria Vyvyan, president of the Country Land and Business Association, remarked: “Let’s stop and think. Let’s not just crash forward, hoping against hope that this will turn out alright or it will turn out differently.” Robert Martin, national chairman at the Tenant Farmers Association, asserted that the initiative to close the tax loophole – which involves affluent individuals acquiring farmland to circumvent inheritance tax – would prove ineffective because capital gains tax rollover relief for agricultural businesses had been retained. Dr Arun Advani, a tax expert and director of the think tank CenTax, informed the committee that the Budget’s measures would likely only “slightly” decelerate land price inflation, given that the 20% IHT rate was “still much more attractive than other sorts of assets”. He elaborated, “What you will still have in this world is people who want to buy up agricultural land competing with genuine farmers who are trying to expand their farm, who really are actually wanting to work on the land.” Furthermore, Stuart Maggs, head of tax and partner at law firm Howes Percival, conveyed to MPs that agricultural estates typically yield a rate of return of approximately 0.5% to 1%. He stated, “It simply means this is going to be unaffordable and so farms are going to have to sell land or sell up. And it’s going to happen a lot.” He further noted that the changes would disproportionately affect the “unfortunate”, such as farmers who die prematurely or are too elderly to adequately plan. During Prime Minister’s Questions, Sir Ed called for a re-evaluation of the policy, contending that family farms had been significantly let down by the preceding Conservative government and now perceived the recent Budget as “the final blow”. Sir Keir responded by stating that the government had committed “a record” £5bn to farming over the subsequent two years. Regarding IHT, he added, “in a typical family case the threshold is £3m and therefore the vast majority of farmers will be unaffected despite the fearmongering of the party opposite [the Conservatives]”. The prime minister’s spokesman subsequently indicated that there would be no reconsideration of inheritance tax, adding, “we understand the strength of feeling about the changes, but we are clear this will only affect a small number of estates”. In related news, the environment department last week highlighted £343m in payments allocated for nature-friendly farming activities, benefiting over 31,000 farmers. It also unveiled new specifics for its environmental land management schemes, which provide remuneration to farmers for delivering “public goods”, encompassing elements from healthy soil, rivers, and hedgerows to the creation of habitats and extensive nature restoration initiatives. Separately, a government report has issued a warning that the long-term deterioration of the rural environment and the exacerbation of climate change present serious threats to the UK’s food security. The most recent three-yearly report on food security determined that the UK achieved 75% self-sufficiency in domestically cultivable food last year and produced the equivalent of 62% of the food consumed. However, while these figures remained broadly consistent with those of the past 20 years, the report indicated that reductions in “natural capital” – resources such as clean water, healthy soils, and wildlife like pollinators – constituted a pressing concern for UK food production. It further noted that extreme weather continued to exert a considerable impact on domestic output, particularly affecting arable crops, fruit, and vegetables.