Farmers Union Urges Labour to Pause Agricultural Inheritance Tax Reforms

Tractors lined up outside the Houses of Parliament during a protest by farmers over the changes to inheritance tax rules in the recent budget, in Westminster, London, England, on Dec. 11, 2024. Stefan Rousseau/PA

The National Farmers’ Union (NFU) has urged the government to pause agricultural inheritance tax reforms in order to protect food security and the farming industry.

The government announced plans to impose inheritance tax on farms worth more than £1 million in the October budget.

Under the policy, agricultural property relief (APR) will be scrapped, so tax will be levied at 20 percent on farms worth more than £1 million. 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.

In his New Year message, published on Monday, NFU President Tom Bradshaw said that the inheritance tax reforms, proposed by the Labour government, will devastate businesses, families, and rural communities.

He called on the government to pause the reforms and find a solution that would “mitigate the extreme human impacts of this indefensible family farm tax policy.”

“In all my years in the industry, I’ve never experienced the anger, despair and sense of betrayal following the Chancellor’s announcement to changes to inheritance tax, which has long protected farming’s ability to pass on the farm business to the next generation, thereby protecting food producing businesses and the nation’s food security,” he said. “More than 265,000 people have signed our family farm tax petition expressing their anger and frustration, and backing NFU calls for an immediate u-turn.”

Farmers have said the new tax will force their families to sell off the land they inherit in order to settle the tax bill. The policy has caused considerable backlash from countryside communities and led to a dispute over exactly how many farming businesses would be affected.

Defending the policy, Chancellor Rachel Reeves said in November that in some cases the threshold could in practice be about £3 million.

“To cap a wretched year, we saw a Labour government, which, after 14 years in opposition, promised to reset its relations with British farmers and deliver a much-needed lift to farmer confidence,” Bradshaw said. “Instead, it delivered an inflationary budget and all but removed the tax reliefs for agriculture property and business property.”

Public Support

Some 13,000 people attended a rally in central London in November to protest the government’s plans. Farmers, political party leaders, and celebrities were among those who headed to Parliament Square to call for the government to row back its decision.

Opposition party MPs attended in solidarity, including Conservative Party leader Kemi Badenoch, Reform’s Nigel Farage, and Sir Ed Davey of the Liberal Democrats.

The president of the NFU, which represents more than 46,000 farming and growing businesses in the UK, noted the “overwhelming public support” for British farmers.

“We saw these raw emotions play out at our mass lobby of MPs in Westminster, the farmer rally in Whitehall, and at the various tractor protests in London and around the UK, with tens of thousands of farmers passionately expressing how this tax will devastate their businesses, families, rural communities and national food security,” Bradshaw said.

Food Security

Bradshaw said strict standards on food imports are needed to protect British farmers from unfair competition with products produced under conditions that would be considered illegal in Britain.

He called for laws to increase public buying of British food and a planning system to support farm infrastructure.

“These are the building blocks needed to secure UK food security and provide Britain’s farmers and growers the confidence they desperately need to invest for the future and deliver on our joint ambitions,” he said. “That is, to produce more sustainable, affordable homegrown food, while creating more jobs and delivering for nature, supporting greener energy security and climate-friendly farming.”

A government spokesperson reaffirmed Labour’s commitment to farmers, highlighting the government’s allocation of £5 billion to the farming budget over two years, describing it as the largest investment ever made in sustainable food production and nature recovery.

The spokesperson also pointed to the development of a 25-year farming roadmap designed to enhance the profitability of rural businesses in the years ahead.

Addressing reforms to agricultural and business property relief, the spokesperson said they will impact around 500 estates a year.

“For these estates, inheritance tax will be at half the rate paid by others, with 10 years to pay the liability back interest free,” the spokesperson said. “This is a fair and balanced approach which will help fix the public services we all rely on.”

PA Media contributed to this report.