Welsh Secretary Confirms No Reversal on Farm Inheritance Tax Exemption Changes

Welsh Secretary Jo Stevens stated that there would be no reversal of the decision to remove an inheritance tax exemption for farms valued over £1 million, acknowledging that “some farmers in Wales won’t be happy”. Ms. Stevens advocated for the new tax, which will apply to combined business and agricultural assets at an effective rate of 20% starting in April 2026. In response, certain Welsh farmers expressed concerns that the revised regulations would negatively impact farming families. Concurrently, the leader of the Welsh Conservatives in the Senedd characterized the alterations as “devastating”. Stevens remarked, “Lots of people don’t have anywhere near a million pounds when they die.” Speaking to BBC Politics Wales, she asserted, “Three quarters of farmers will be unaffected.” She further elaborated, “This will impact only on the wealthiest farmers in the United Kingdom and we know the vast majority of our farmers in Wales are small farms.” Stevens concluded, “We don’t expect that there will be a significant impact on farmers in Wales.” The Farmers’ Union of Wales (FUW) had previously voiced “grave concerns” regarding the £1 million cap on relief for business and agricultural assets. Due to exemptions for houses and for married couples transferring assets to direct descendants, the total exemptions could reach £2 million before any tax becomes payable. However, any amount exceeding this threshold would be subject to a 20% tax, which can be paid over a 10-year period. NFU Cymru, another farming union, stated that these changes are projected to not only inflict “lasting damage to Welsh farming and the break-up of family farms, but will also leave farmers with neither the means, confidence nor the incentive to invest in the future of their business”. The UK government indicated that 75% of farms would not be subject to inheritance tax. Conversely, farming unions contended that the modifications “will bring the majority of Wales’ family farms into the scope of this tax”. The Treasury reported that it lacked an estimate for the impact on Welsh farms. However, it projected that approximately 2,000 estates across the UK would be affected from 2026-27, with about 500 of these claiming agricultural property relief. Liz Saville Roberts, Plaid Cymru’s party leader in Westminster and MP for Dwyfor Meirionnydd, voiced apprehension that the alteration could result in the fragmentation and sale of farms. She told BBC Radio Wales’ Sunday Supplement, “One factor that hasn’t been considered… is the effect this is likely to have on tenant farmers.” She added, “If you’ve got large estates being hit by death duties, they will then sell up.” Consequently, she noted, “Tenant farmers, they could then have their land sold out from underneath them.” Andrew RT Davies, the Conservative leader in the Senedd, asserted that UK Labour had provided assurances the previous year that no such changes would occur, thereby enabling “family farms to continue to be passed through the generations”. He declared, “This is a devastating change, a brutal betrayal and they should hang their heads in shame.” Stevens commented, “This was a Budget where we had to fix the foundations.” She further explained, “We have had to ask the people with the broadest shoulders to pay a little bit more so that we have got that money to bring down waiting lists, to invest in our schools and to make our streets safer.” When questioned about whether farmer criticism might prompt the UK government to reconsider, Stevens responded that “it was announced in the Budget this week, and that’s what will happen”.