“This is the most significant change to the inheritance tax regime for a generation.” [Strutt & Parker]
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The government hopes to introduce changes to agricultural property relief:
Reforms announced at the Budget will help raise money to fix the public finances while protecting small family farms from unfairly high inheritance tax.
There has been considerable reaction – including from Devon, with this week’s Devoncast looking at how the budget affects farming and tourism and one MP demanding more support for Devon farmers:
South Devon Liberal Democrat MP Caroline Voaden urged the government to abandon the proposed “tractor tax”, which she claims could see up to 27 per cent of farms being forced to pay a higher rate of inheritance tax.
Meanwhile, Devon Live reports how Devon farmers warn of budget stress:
Cherly Cottle-Hunkin, the Lib Dem group leader at Torridge District Council is part of a father and daughter duo working on their sheep and beef farm in Petrockstowe in North Devon. Cllr Cottle-Hunkin said: “Despite being relatively small, we too have been feeling the immediate stress and worry of Labour’s budget announcements, and thousands of others are similarly feeling the strain.
“And now farmers have suddenly been told by the new Labour government that we will have to magic up hundreds of thousands of pounds to keep on farming our land into the future. Where do they think this is going to come from? We’re not wealthy and our hours worked don’t come close to minimum wage. The farming families that I know all work other jobs to help keep their farms afloat.
“Yes farms are asset rich – but please don’t call us millionaires: we don’t get to see that money. It’s a livelihood and way of life that has passed down. Something we’ve grown up doing and been involved with since we were born, and we take great pride in producing high welfare, high quality food for people to eat. This is far worse than simply feeling angry at the liars in Westminster; we feel sick about our future and don’t want to see our livelihoods disappearing. We’re told there may be ways to gift things over, but this takes seven years to take effect.”
The government says this is an overreaction and yesterday a Defra minister played down the impact of IHT changes:
Defra farming minister Daniel Zeichner has accused farmers of overstating the impact of the planned cuts to agricultural property relief (APR) which mean farming assets worth more than £1m will be liable for 20% inheritance tax (IHT). Addressing the annual Egg and Poultry Industry Conference in South Wales on Monday (11 November), Mr Zeichner said there were a range of views as to how these measures will work out.
“Inheritance tax is really complicated and no two situations are the same, but our genuine view is that it will not be affecting many people,” he said. “The feedback I’ve been getting from some of my colleagues is that, when people have sat down and gone through the detail, they are then much more reassured.” In particular, he pointed to Treasury figures which show that there were just 462 claims for APR last year, and that figure was expected to go down.
Perhaps there is some ‘overreaction’ – and perhaps most of the noise is coming from those who own large estates. So perhaps it is no surprise that agents Strutt & Parker are not very sympathetic towards the government in their analysis of what the Autumn Budget means for farmers and landowners:
This is a Budget which has sent shockwaves through the rural sector and has implications for both owner-occupiers and tenant farmers. It feels like a very political Budget and the Government has signalled, through the changes in inheritance tax and its decision to speed up cuts to basic Payments in England, that bigger farms and rural estates will not get any special treatment. In fact, due to their size / assets, they will be less supported. The frustration and anger being expressed by those in the land-based sector reflects the fact that even relatively small farms will be caught by the new rules. There is also the problem that farming is a fundamentally capital-intensive business with low returns, making funding these liabilities difficult without undermining the viability of the business.
This paper is from Strutt & Parker
Inheritance tax changes
The Government has announced that from April 2026 Agricultural Property Relief (APR) and Business Property Relief (BPR) rules will be changed so there will be 100% relief on the first £1m of assets and then 50% relief on assets after that, which equates to an effective tax rate of 20%.
Dr Jason Beedell, Rural Research Director: “This is the most significant change to the inheritance tax regime for a generation. It will be seen as a major U-turn given promises were made ahead of the election that there were no plans to change APR or BPR and Defra minister Steve Reed also made a commitment just a couple of months ago to address low confidence and provide stability for the farming sector.
“The Government has said the aim is to restrict the generosity of APR and BPR for “the wealthiest estates”, but the £1 million nil rate band, applied after any other general reliefs, will only enable around 100 acres to be transferred free of IHT, so this will really hit working farmers and their families hard. For an average sized farm (350 acres), the increase in IHT liability could be around £0.5m. For a large farm (1,000 acres), the increase could be around £2m. This comes at a time when farming businesses are facing direct support payments being phased out even faster, extreme weather events and market volatility.”
However, such protest could spread beyond the media, as farmers ‘could block ports and disrupt food supply’ in protest over budget tax changes:
Farmers could blockade ports or cause food shortages by refusing to supply their produce if the government doesn’t listen to calls to rethink inheritance tax changes made in the budget, Sky News has been told. Tractor go-slows and a strike on spreading sewage sludge on their land are also being considered by some “hardcore groups”, according to Clive Bailye, the founder of The Farming Forum, which he described as the “Mumsnet for farmers”.
Chancellor Rachel Reeves announced in the new Labour government’s first budget that an inheritance tax of 50%, at an effective rate of 20%, will be imposed on farms worth over £1m, where previously they were exempt. It was met with anger from rural communities, with warnings the change could lead to food price rises and would have a “catastrophic” impact on family farms. But Number 10 has insisted farmers still benefit from a “generous” tax regime following the backlash.
All of this is part of the bigger picture of farmers getting angry about their plight – in the UK, the EU and beyond…
UK farmers were already making their voices heard over proposed changes back in 2022: Good Food, Good Farming March – Landworkers Alliance
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