Farmers Say Food Production Could Be Wiped out by Budget Tax Change

A tractor at a farm in Harpenden, England, on April 8, 2022. Hollie Adams/Getty Images

Family farming could be wiped out in a generation by changes to inheritance tax in the Budget, farmers and politicians have said, warning that the impact on the food chain will be felt by consumers across the UK.

Chancellor Rachel Reeves announced on Wednesday that from April, changes to Agricultural Property Relief (APR) will mean that inheritance tax will apply to all those those leaving behind combined business and agricultural assets worth over £1 million.

With 50 percent relief, this will mean that the state will effectively take 20 percent of the value of family farms when they are passed down.

APR is a relief from inheritance tax granted in 1984 by an act of Parliament for agricultural property and land, to exempt farming from the usual death taxes. The first £1 million of combined business and agricultural assets will continue to attract no inheritance tax.

‘Gone in a Generation’

Farmer Oli Harrison said on a video he posted to social media platform X: “I now can’t afford to die. If I die, then the tax bill will be so great that my children will not be able to afford to pay it,” adding that people with a property worth up to £1 million are allowed to pass this on, tax-free.

“But if you’re a farming business, with land, which is your shop floor for producing food, now the government wants 20 percent of that on your death. Now, no one minds paying tax when they’re making money. But when we’re not making money, what do we pay the tax with? We’re going to have to sell the land.”

He questioned who would want to go into farming if they are not born into that world, when the lifestyle involves hard work, doing long hours for little money in often “rubbish weather.”

“We’ve just wiped out UK agriculture, because no one wants to do it anymore,” he said, adding that the only reason people stay in farming is to pass it on to the next generation.

Harrison and other farmers on social media predicted that food production in the UK would be “gone within a generation.”

The National Farmers’ Union President Tom Bradshaw said in a statement that it was clear the government did not understand “that just because a farm is a valuable asset, doesn’t mean those who work it it are wealthy. This is one of a number of measures in the Budget which make it harder for farmers to stay in business and significantly increases the cost of producing food.”

On Thursday, House of Commons Leader Lucy Powell faced a series of questions from mainly Conservative members, together with MPs from the Northern Ireland unionist parties, about the impact of the Budget on farmers.

Northern Ireland Impact

Democratic Unionist Party MP Carla Lockhart warned that family farms could be broken up if people are forced to sell their land to pay the cost of passing the farm to the next generation.

“The threshold imposed by the government will also be surpassed by many farms, leaving them facing a potentially significant tax bill,” she said.

DUP MP Carla Lockhart in an undated file photo. PA

“This will be the case right across the United Kingdom and it is inevitable that it will face very significant opposition within Parliament.

“Should the government decide to continue with their policy, then there will also be a strong focus on why they have decided to set the threshold at a level that will impact many more farms than the number claimed by the chancellor.”

Lockhart said that farming unions had warned the government of the impact that weakening APR would have.

Impact on Food Prices

Ulster Unionist peer Lord Elliott said the Budget will have a “devastating impact on Northern Ireland farmers,“ warning that it could lead to ”significant increases” in the cost of food in shops and supermarkets.

“The result will not only be bad for the farming community but also for food consumers and the public in general,” Elliott added.

Accusing Labour MPs of having “not an ounce of business experience” between them, shadow business secretary Kevin Hollinrake said: “Labour’s death taxes will hit farms and businesses. Families with a typical farm will have to find hundreds of thousands of pounds or see their farms broken up and sold.”

Business minister Douglas Alexander defended the reform, saying “difficult and necessary choices” had to be made in the Budget, with the government insisting there was a £22 billion “black hole” left by the Conservatives in the public spending plans.

“Farmers, like any other business people, need the stability that will be delivered as a consequence of fixing the foundations that were set out yesterday.”

Dr. Luke Evans, Conservative MP for Hinckley and Bosworth, said farmers had woken up feeling “broken and devastated” by Wednesday’s announcement.

He said there should be funding to support those farmers who are “going to suffer” as they are unable to pass on their family farm, adding, “That impact on food security is going to be severe and shocking.”

‘Scaremongering’ Accusation

Powell replied, “This government is incredibly committed to our farming community, to our rural communities, to ensuring food security.”

She acknowledged there were “difficult” choices, adding: “I’d gently say to [Evans] that he should be careful about scaremongering about the actual reality of what is happening here because three-quarters of those currently entitled to the full relief will still be entitled to the full relief after the measures in this Budget.”

Conservative MP John Cooper said: “I’m aghast to hear that it is scaremongering to talk about the damage that’s being done to agriculture. I can tell you in Dumfries and Galloway, the howls of concern are real.

“We really need to discuss this, Britain cannot live by air-freighted mangetout alone. This Budget imperils food security in this country, and we must have action on that.”