Farmers Win Big as Government Softens Inheritance Tax Blow
UK government raises farm inheritance tax threshold to £2.5m after protests. New agricultural tax rules aim to protect family farms and rural businesses.
Government proposals to tax inherited farmland have been softened, with the threshold raised from £1m to £2.5m.
The change follows months of protests by farmers and concerns raised by some Labour backbenchers.
In last year's budget, ministers said they would begin taxing inherited farming assets worth more than £1m at 20% from April 2026.
Environment Secretary Emma Reynolds said: "We have listened carefully to farmers across the country and we are making changes today to protect more ordinary family farms.
"It is right that larger estates contribute more, while we support the farms and businesses that are the backbone of Britain's rural communities."
National Farmers Union president Tom Bradshaw welcomed the change, saying it "takes many family farms out of the firing line".
Gavin Lane, president of the Country Land and Business Association, said: "The government deserves credit for recognising the flaws in the original policy and changing course.
"However, this announcement only limits the damage – it doesn't eliminate it entirely.
"Many family businesses will have expensive machinery and land that takes their value above the threshold, yet they operate on such tight margins that this tax burden will be difficult for them to bear."
In the 14 months since the initial proposal was announced, farmers have regularly protested outside Parliament.
Some Labour MPs in rural areas also raised concerns. In a recent parliamentary vote on the scheme, a dozen backbenchers abstained and one, Marcus Campbell-Savours, voted against it.
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Campbell-Savours was subsequently suspended for voting against the government, meaning he now sits as an independent MP. Conservative leader Kemi Badenoch said in a social media post: "This fight is not over.
"Other family businesses are still affected by Labour's tax raid, and we will continue to apply pressure until the tax is removed for them too."
Liberal Democrat spokesperson Tim Farron MP said: "It is utterly unforgivable that family farmers have been put through more than a year of uncertainty and distress since the government first announced these changes.
"We demand that the government scrap this unfair tax entirely, and if they refuse, the Liberal Democrats will table amendments in the new year to reduce it."
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