The government has reversed its decision to expand inheritance tax to include farms, a move that sparked strong opposition from farmers who argued it would hinder passing down their farms to their children. This change comes after months of farmer protests and concerns voiced by certain Labour backbenchers.
In the previous year’s Budget announcement, ministers introduced a plan to impose a 20% tax on inherited agricultural assets valued over £1 million starting in April 2026. However, in response to the backlash, the government has now revealed a significant concession by raising the threshold to £2.5 million. The updated regulations are set to take effect in April 2026.
By increasing the threshold, the number of farms subject to higher inheritance tax payments will be notably reduced, ensuring that only the largest estates will be impacted.
Environment Secretary Emma Reynolds emphasized the importance of farmers in food security and environmental conservation, expressing determination to collaborate with them for a prosperous future in British agriculture. She stated that the adjustment to the threshold, now at £2.5 million for individuals and £5 million for couples, will exempt many family farms from inheritance tax burdens, with larger estates expected to contribute more.
NFU president Tom Bradshaw welcomed the announcement, noting that it would alleviate the tax burden for numerous family farms. He highlighted the unexpected nature of the changes to Agriculture Property Relief (APR) and Business Property Relief (BPR) in the previous budget, which caused distress in the farming community. Bradshaw expressed gratitude for the government’s reconsideration following strong advocacy by the NFU and its members.
In contrast, the Liberal Democrats urged the government to completely eliminate the “unfair tax,” pointing out that many family farms could still struggle financially, barely reaching minimum wage levels.
