UK Government Softens Farm Inheritance Tax After Prolonged Rural Backlash
After months of protests and political pressure, ministers raise the inheritance tax threshold for farms to protect family estates from heavy tax burdens
The United Kingdom government has significantly eased its planned inheritance tax reforms on agricultural land following sustained protests by farmers and mounting political opposition.
Ministers announced a climbdown on Tuesday, raising the threshold at which farmland and associated assets are liable for inheritance tax from £1 million to £2.5 million, a move designed to shield more family-run farms from onerous tax liabilities that had prompted demonstrations across rural Britain.
The original policy, unveiled in the Budget last year, aimed to remove a longstanding exemption on agricultural property and impose a 20 per cent inheritance tax on estates valued above £1 million beginning in April 2026. Critics, including the National Farmers’ Union and numerous farming groups, argued that the change would threaten the intergenerational transfer of farms, as many were “asset-rich but cash-poor,” potentially forcing heirs to sell land to pay tax.
Thousands of farmers mounted tractor protests and lobbied MPs, keeping the issue at the forefront of national debate.
Under the revised scheme, individual farmers will benefit from the higher threshold, which effectively means that couples can pass on up to £5 million of agricultural assets free from inheritance tax if they combine allowances.
Government estimates suggest that around 85 per cent of farming estates claiming agricultural property relief in the relevant tax year will pay no inheritance tax as a result of the adjustment, a notable increase from previous projections.
The concession is expected to cost the Treasury around £130 million in forgone revenue but still raise significant funds under the amended structure.
Environment Secretary Emma Reynolds said ministers had listened to the concerns of farming communities and acted to “protect more ordinary family farms,” while also maintaining that larger estates should “contribute more.” The National Farmers’ Union welcomed the announcement as a “huge relief” that aligned more closely with the original intent of safeguarding family-held agricultural businesses.
Nonetheless, some campaigners and opposition lawmakers called for further reform or outright abolition of the inheritance tax on farms, arguing that even the revised plan could leave some estates vulnerable.
Ministers announced a climbdown on Tuesday, raising the threshold at which farmland and associated assets are liable for inheritance tax from £1 million to £2.5 million, a move designed to shield more family-run farms from onerous tax liabilities that had prompted demonstrations across rural Britain.
The original policy, unveiled in the Budget last year, aimed to remove a longstanding exemption on agricultural property and impose a 20 per cent inheritance tax on estates valued above £1 million beginning in April 2026. Critics, including the National Farmers’ Union and numerous farming groups, argued that the change would threaten the intergenerational transfer of farms, as many were “asset-rich but cash-poor,” potentially forcing heirs to sell land to pay tax.
Thousands of farmers mounted tractor protests and lobbied MPs, keeping the issue at the forefront of national debate.
Under the revised scheme, individual farmers will benefit from the higher threshold, which effectively means that couples can pass on up to £5 million of agricultural assets free from inheritance tax if they combine allowances.
Government estimates suggest that around 85 per cent of farming estates claiming agricultural property relief in the relevant tax year will pay no inheritance tax as a result of the adjustment, a notable increase from previous projections.
The concession is expected to cost the Treasury around £130 million in forgone revenue but still raise significant funds under the amended structure.
Environment Secretary Emma Reynolds said ministers had listened to the concerns of farming communities and acted to “protect more ordinary family farms,” while also maintaining that larger estates should “contribute more.” The National Farmers’ Union welcomed the announcement as a “huge relief” that aligned more closely with the original intent of safeguarding family-held agricultural businesses.
Nonetheless, some campaigners and opposition lawmakers called for further reform or outright abolition of the inheritance tax on farms, arguing that even the revised plan could leave some estates vulnerable.
