Farmers warn inheritance tax changes pose threat to family farms

Farmers have cautioned that revisions to inheritance tax legislation could signify “the death of the family farm.” The UK government has declared its intention to implement a 20% tax on inherited farming assets exceeding £1m. However, Aled Jones, who serves as president of NFU Cymru, stated that he had “no doubt” this measure would deprive numerous farmers of the “means, confidence nor the incentive to invest in the future of their business.” Concurrently, the deputy first minister of Wales indicated that further analysis was required to comprehensively grasp the implications of these alterations. Huw Irranca-Davies, who also holds the position of rural affairs secretary, expressed his desire to “get away from the noise and understand the granular detail” of the proposals put forth by Chancellor Rachel Reeves. He was addressing inquiries from farmers during the NFU Cymru conference held in Llandrindod Wells. He remarked, “What does this actually mean for family farms in Wales, bringing in new entrants, succession planning and so on – all of those areas need a bit more work.” Agricultural property relief (APR), established in 1984, has historically exempted land utilized for crops or animal rearing, along with farm buildings, cottages, and houses, from inheritance tax. However, the UK government has now declared the introduction of the 20% rate, scheduled to take effect from April 2026. Ms Reeves stated that, in certain situations where additional inheritance tax allowances are applicable, the APR threshold could effectively reach approximately £3m, implying her focus was solely on the most affluent landowners. Nevertheless, farming unions in Wales contest this assertion, contending that numerous smaller family farms will be impacted by the revisions. Mr Jones commented: “The changes announced are not only a threat to our family farm structure and our tenanted sector but also to our nation’s food security.” Bernard Llewellyn, a farmer residing in Carmarthenshire, suggested that an additional consequence of the change might be that land divested to cover tax liabilities would be “taken up by companies from the other side of the border” for tree planting and to “mitigate their carbon.” He added that this would occur instead of “the land being used by a young farming family to produce food which is desperately needed in this country.” Kate Miles, manager of the farming mental health charity DPJ Foundation, reported that the organization was receiving communications from farmers expressing profound concern regarding the situation. She stated: “We’re seeing this level of fear, of worry and of outrage across the country… a really powerful maelstrom of emotions that has a serious adverse impact on mental health.” Mr Irranca-Davies defended the chancellor, acknowledging she faced “unenviable choices” in addressing a “£22bn black hole in the public finances.” He remarked: “Every farming family here will also rely on the NHS, on bringing down waiting times, on transport improvements – and that’s all part of the budget decisions too.” However, he further noted that anything that “might jeopardise” the “trajectory towards a sustainable future for Welsh farming” was a cause for concern. “The treasury case has been made very clearly and their assessment of the impact is that it will be marginal… the unions are putting forward a very different case,” he conveyed. He concluded: “I know there’ll be ongoing discussions.” Copyright 2024 BBC. All rights reserved. The BBC disclaims responsibility for the content found on external websites. Details concerning their external linking policy are available.