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Labour has been forced into a climbdown on inheritance tax for farmers following a fierce backlash from rural communities. <\/p>\n
The government on Tuesday said the threshold for paying 20 per cent inheritance tax on farmland would increase to \u00a32.5mn, from the \u00a31mn initially proposed, with effect from April.<\/p>\n
This means that spouses or civil partners with combined estates worth up to \u00a35mn will pay no inheritance tax on top of existing allowances. <\/p>\n
Officials said the change would reduce the number of family estates facing inheritance tax bills from 2,000 under the original plans to around 1,100 now. <\/p>\n
Environment secretary Emma Reynolds said the government had \u201clistened closely to farmers across the country\u201d and was making changes \u201cto protect\u201d more ordinary family farms.<\/p>\n
\u201cIt\u2019s only right that larger estates contribute more, while we back the farms and trading businesses that are the backbone of Britain\u2019s rural communities,\u201d she said. <\/p>\n
The move is the latest in a series of U-turns this year after the Labour government also dropped plans to remove the winter fuel allowance from millions of pensioners and to slash the disability welfare bill.<\/p>\n
Labour\u2019s original inheritance tax plan would have meant that agricultural landowners would pay a 20 per cent levy on land worth between \u00a31.3mn and \u00a33mn, depending on whether they were married and if they owned a home.<\/p>\n
But the plan triggered a significant backlash and energised the farming community \u2014 including the National Farmers\u2019 Union, the Tenant Farmers Association and the Country Land and Business Association \u2014 which have challenged ministers. <\/p>\n