In a recent turn of events regarding agricultural inheritance tax in the UK, farmers have expressed their concerns and are fervently calling upon Prime Minister Rishi Sunak to pause any changes outlined in the government’s budget. The National Farmers’ Union (NFU) president, Tom Bradshaw, articulated this plea during discussions with Members of Parliament, highlighting the potential adverse impacts the proposed tax revisions could have on farming families. The farmers’ community stands ready for collaboration with the government, seeking to reshape the policy to better suit their needs, keeping in view the unique challenges they face.
The atmosphere around Westminster became charged when demonstrators made their voices heard by driving tractors through the streets as part of a protest against the changes introduced in the October budget. During these protests, Liberal Democrat leader Sir Ed Davey advocated for a redevision of agricultural policies, underscoring the essential contributions of British family farms to the national landscape. Meanwhile, the opposition leader, Sir Keir Starmer, countered these concerns by suggesting that most farmers would remain unaffected by the alterations put forward in the budget.
According to the budget announcement slated to take effect in April 2026, any inherited agricultural assets exceeding the valuation of £1 million, previously enjoying an exemption, will now be subject to a 20% inheritance tax, a rate that, while half of the standard tax, still poses significant financial implications for the farming community. Accompanying allowances might grant couples the ability to transfer farms valued up to £3 million, yet many farmers argue this fails to account for the reality of their financial situation. They describe a persistent struggle of being “asset-rich” yet “cash-poor,” fearing that the incoming tax liabilities could compel them to sell essential land or assets to meet financial demands.
During a session before the Commons environment, food, and rural affairs committee, farmers’ leaders, including Bradshaw, reiterated their call for a more nuanced approach to tax reform, potentially shifting focus from business wealth to personal wealth. They believe that such a reassessment could yield a more equitable tax policy favorable to farmers’ interests. Robert Martin, chair of the Tenant Farmers Association, echoed these sentiments, asserting that efforts to close tax loopholes that allow wealthier individuals to sidestep inheritance tax may struggle to succeed, primarily due to existing exemptions like capital gains tax rollover relief for agricultural enterprises.
In this context, tax expert Dr. Arun Advani from the think tank CenTax commented that while the tax measures may induce only a slight decrease in land price inflation, they could fail to alleviate the competitive pressures facing genuine farmers seeking to expand their operations. He emphasized that existing incentives to purchase agricultural land would continue to attract potential buyers, complicating the landscape for actual farming endeavors.
The ongoing dialogue surrounding the inheritance tax has attracted varying opinions, culminating in a letter from Victoria Vyvyan, president of the Country Land and Business Association. In her correspondence to Starmer, she urged caution against rushing forward without a thorough examination of the implications, cautioning against blind hope in a scenario that might not play out favorably for farmers.
During Prime Minister’s Questions, Sir Ed Davey reiterated the sense of trepidation among family farms, articulating their feeling of betrayal from previous Conservative administrations and expressing fear that the recent budget could represent a final misstep. In response, Sir Keir maintained that the government had invested a record £5 billion in farming operations over the subsequent two years, reiterating that typical family estates would likely remain under the £3 million threshold, enabling the vast majority of farmers to escape the ramifications of the impending inheritance tax change.
A spokesperson for the Prime Minister later reaffirmed that there wouldn’t be a reconsideration of the inheritance tax policy despite the strong sentiments expressed by the farming community, emphasizing that the changes would only affect a small fraction of estates. The entire situation encapsulates the ongoing struggle between farmers advocating for fair treatment and a government weighing fiscal reforms against broader national interests. As discussions progress, both sides appear committed to finding a resolution, although the path forward remains fraught with complexities and challenges.
