The National Farmers’ Union (NFU) said the change outlined in Wednesday’s Budget were nowhere near enough to protect many family farms and did nothing to remove the “cruel impact” of the policy on elderly and vulnerable farmers.
Farm land is exempt from inheritance tax under a policy called ‘agricultural property relief’ but, under the original planned changes, a 20 per cent tax was due to be applied from April to agricultural assets worth more than £1 million.
Now, the policy has been tweaked by Chancellor of the Exchequer Rachel Reeves, meaning the £1 million threshold of the tax will be transferable between spouses.
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This means that, if a married farmer dies, they would not have to leave £1 million of agricultural assets to their children but could leave it to their spouse instead.
The spouse will be able to use their deceased’s £1 million, in addition to their own £1 million allowance, to hand to their children on their death.
Farmers widowed any time prior to April 2026 will be able to use their deceased spouse’s allowance.
Since the initial changes were announced, there has been mounting opposition, including from TV journalist and farmer Jeremy Clarkson, which has seen several protests.
They once again took to the streets of the capital yesterday ahead of the Chancellor’s Budget speech.
More than 275,000 members of the public have called on the Government to make changes, including trade associations representing 160,000 family businesses which wrote to the Chancellor calling for reform.
NFU President Tom Bradshaw
MPs from across the political divide have also criticised the policy.
NFU president Tom Bradshaw said: “It’s good to see the Government accepts its original proposals were flawed. But this change goes nowhere near far enough to remove the devastating impact of the policy on farming communities.
“It’s only right that agricultural allowances can be transferred between spouses and it’s something we’ve been calling for but it doesn’t go anywhere near far enough in protecting the working people of the countryside.
“It does nothing to alleviate the burden it puts on the elderly and vulnerable. It is also a huge smack in the face to the Labour MPs who have been working so hard to find a way through this for their local farmers.
“The Chancellor said she wanted to ‘back working people not make them poorer’ and to ‘increase investment not cut it’. To do that, Government must look again at the multiple solutions that have been put forward by industry and tax experts.”