Labour’s farming minister Daniel Zeichner has acknowledged that reversing the government’s decision to cut inheritance tax relief for farms valued over £1 million is beyond his remit. Speaking at the Royal Norfolk Show, Zeichner emphasised that no legislation has yet been enacted on the issue and stressed the necessity of the government’s fiscal decisions to secure the country’s finances. However, he also recognised the stresses faced by farming families, particularly in the east of England, due to the impending tax changes.

The changes, due to come into effect from April 2026, will restrict the current 100% Agricultural Property Relief (APR) and Business Property Relief (BPR) to the first £1 million of combined agricultural and business property. Any value above this threshold will receive only 50% relief, effectively subjecting that portion to a 20% inheritance tax. This reform is intended by the government to better target tax reliefs and protect smaller family farms, with estimates suggesting that around 500 of the wealthiest estates per year will be affected. Yet, many in the agricultural sector fear it will have widespread negative consequences for family-owned farms, which are often asset-rich but cash-poor.

The shadow Secretary of State for Environment, Food and Rural Affairs, Victoria Atkins, voiced sharp criticism of the policy at the same event. She argued that the tax changes will lead to the loss of around 22,000 jobs in the east of England alone and could cost the local economy £1.5 billion. Atkins condemned Labour MPs who supported the tax change, stating they were backing job losses and damage to local economies. She highlighted the concerns of young farmers striving to continue family traditions, who feel the government is signalling there is no future for them in farming under these tax rules. Atkins expressed hope that Labour MPs, particularly in Norfolk, pressure the Chancellor to reverse the tax changes to protect family farms and the wider rural economy.

The farming community has broadly reacted with dismay to the announcement. The National Farmers’ Union labelled the Autumn Budget’s inheritance tax changes as “disastrous” for family farms, warning they threaten the ability of future generations to continue producing British food and may force sales of land to meet tax liabilities. Public figures like broadcaster Jeremy Clarkson and property expert Kirstie Allsopp have also criticised the government, with Allsopp suggesting the government shows a lack of understanding of rural voter priorities.

The essence of Agricultural Property Relief is to exempt agricultural land and buildings from inheritance tax fully, provided certain occupancy conditions have been met, notably that the land has been farmed by the owner for at least two years before death. The government’s reform limits this full relief to £1 million in combined value, with assets beyond that receiving only partial relief. This approach aims to preserve reliefs for smaller farms while raising additional revenue from wealthier estates, though it is seen by critics as disrupting family farm continuity and potentially encouraging land sales or breakups of farm enterprises.

Industry analysts and tax experts have been involved in consultations on these reforms, focusing on issues such as how the changes apply to assets held in trusts and the broader impact on farm business planning. The government defends the reform as a necessary measure for fiscal responsibility and fairness in the tax system, but it remains a contentious issue within rural communities, reflecting the delicate balance between economic policy and the sustainability of the nation’s agricultural heritage.

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Source: Noah Wire Services