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![\"\"](\"https:\/\/www.newsbeep.com\/au\/wp-content\/uploads\/2025\/08\/GettyImages-2198182889.jpg\")
\t\t A tractor, carrying the message \u201cStuck Farmer\u201d, drives in Westminster during a Farmers Protest over inheritance tax relief being slashed on February 10, 2025 in London, England. Demonstrators gather in central London to protest against changes to inheritance tax rules for land ownership for farmers. (Photo by Alishia Abodunde\/Getty Images)\t<\/p>\n
Most farmers will be able to shoulder the inheritance tax bill foisted on them by the Treasury at last autumn\u2019s Budget without having to sell their family farm, according to a fresh analysis which also proposed new ways the reforms could be \u201cbetter targeted.\u201d<\/p>\n
The paper, from independent tax think tank the Centre for the Analysis of Taxation<\/a> (Centax), found that as many as 80 per cent of the agricultural estates affected by the change will be able to pay their inheritance tax with other assets they own. <\/p>\n In what is the first in-depth, independent study of the overhaul, which sought to end the decades-long inheritance tax relief enjoyed by large farms and family businesses, the research assuaged fears that most smallholdings and family farms would struggle to pay their bill without selling up.<\/p>\n As part of her maiden Budget, Chancellor Rachel Reeves chose to tighten inheritance tax carve-outs granted to farms and family businesses<\/a> that dated back to Margaret Thatcher\u2019s tenure as Prime Minister, claiming they were being abused by super-rich asset owners.<\/p>\n Under the new system, farms worth more than \u00a31m would be liable to a 20 per cent inheritance tax bill on everything above the \u00a31m threshold. <\/p>\n The policy is more generous than standard inheritance tax, which is levied at 40 per cent after a threshold of \u00a3325,000. But it sparked uproar among farmers and the rural community generally, who feared landowners would need to sell their farms to pay the bill, or that they would plunge already struggling farming businesses into further financial distress.<\/p>\n Inheritance tax changes could be \u2018better targeted\u2019<\/p>\n And the Centax study<\/a> \u2013 based on HMRC data \u2013 estimated that while the majority of farms will be able to pay their IHT bill using other assets, 70 of the 1,560 farms now liable to inheritance tax annually will not. As many as 40 of these would face a bill greater than 20 per cent of their farm\u2019s overall income.<\/p>\n \t\t\t\t\tRead more<\/p>\n \t\t\tRecord number of farms shut after inheritance tax grab<\/a><\/p>\n \u201cOur analysis shows that the government\u2019s reform largely protects family farms whilst limiting claims by the wealthiest estates,\u201d said Andy Summers, director at Centax and associate professor at the London School of Economics. \u201cBut the relief could be better targeted to reduce its use for tax planning and further extend protection for businesses, including farms.\u201d<\/p>\n Summers proposed a rejigging of the rules to raise the relief threshold to \u00a35m, to minimise the impact on working farmers with the least valuable farms caught in the changes. This would be funded by ending the threshold entirely on so-called \u2018passive investors\u2019 in farmland who do not farm themselves but own the land.<\/p>\n