How Labour’s rise in inheritance tax on farmers could spell the end of family farming

Richard Marsden for Daily Mail

Published: 23:22 GMT, 30 October 2024 | Updated: 23:23 GMT, 30 October 2024

Family and tenant farmers remained last night fearing their businesses may not survive Labour’s “catastrophic” decision to scrap inheritance tax breaks.

Industry leaders have accused the government of breaking “clear promises” not to interfere with agricultural property benefits.

The National Farmers’ Union predicted the change – ending agricultural property and commercial property relief for farms worth more than £1 million – would “rob the next generation of the ability to continue producing British food” – and could lead to higher prices.

And the country’s Land and Business Association said the move would affect 70,000 farms from April 2026, calling it “nothing short of a betrayal” that would “jeopardize the future of rural businesses.”

Conservative MP Neil O’Brien said: “She has gone too low with the threshold for agricultural property – this is the end of the family farm.”

Chancellor Rachel Reeves said the country “voted for change” and pledged to “invest” as she carries out one of the biggest ever raids on the House of Commons.

Industry leaders have accused the government of breaking “clear promises” not to interfere with agricultural property benefits (file image)

Ms Reeves held a traditional photo shoot today near the famous black door number 11.

Steve Ridsdale will have to pay £600,000 inheritance tax when his parents leave him their farm.

EXAMPLE: Forced to sell part of a farm

Steve Ridsdale will have to pay £600,000 inheritance tax when his parents leave him their farm.

Ridsdale, 50, lives on a £4 million, 260-acre farm in East Yorkshire with his wife Sarah and 12-year-old son Tom (pictured above). It belongs to his father Terry, 81.

He criticized Labor for interfering with agricultural benefits, which allowed farmers to pass on their land to family without having to pay inheritance tax.

The tax will now apply to agricultural land worth more than £1 million, with the effective rate of inheritance tax for the rest being 20 per cent. “Rachel Reeves said it wouldn’t affect family farms but it would affect them all,” said Mr Ridsdale, head of the British Farmers’ Union. “It will destroy the industry. We are going to inherit the farm soon and will have to sell most of it.

“It’s incredible. I wouldn’t be surprised if farmers take to the streets and delay food supplies. I would be surprised if farmers don’t load up on beef or grain for a while. I definitely won’t.

“There is no point in working. I might as well spend all the money on luxury cars and luxury vacations.”

Mr Ridsdale, whose family has been involved in farming for generations, said the removal of benefits would also lead to a fall in land prices as farming is “not particularly profitable”.

“The land is worth this price because there is no IHT on it,” he added. “But your ability to make money from it is poor. The industry will shrink a lot and I can see this becoming another Liz Truss moment.”

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Farmer Clive Bailey, who runs discussion site The Farming Forum, posted an image of the gravestone on social media. He said: “When my parents die, I will have no choice but to sell the land and property. My children will never have the opportunity to farm.”

The Staffordshire farmer added: “There are almost no farms here under £1 million, except for hobby farms. A £1 million farm is 100 acres of land alone and you can’t make a living from 100 acres. It would almost be an insult to say that £1 million protects a family farm.

“In a sector with the highest suicide rate of any profession, some may think it’s time to move away from farming before that happens. Is the government going to get its hands dirty with blood?”

Jeremy Clarkson, TV presenter and owner of the 1,000-acre Diddly Squat farm in Oxfordshire, said: “Farmers. I know you were deceived today. But please don’t despair. Just take care of yourself for at least five years and this downpour will disappear.”

Kirsty Allsopp, TV presenter and property expert, said: “Rachel Reeves has f*cked all farmers, she has ruined their ability to pass on farms to their children… this is a terrible decision and shows the government has ZERO understanding of what is going on.” matters to rural voters.”

Last December, the then shadow minister for environment, food and rural affairs, Steve Reid, assured the National Farmers’ Union that Labor had “no plans” to scrap the tax breaks.

And in February 2023, Sir Keir Starmer appeared to recognize the value of British farmers, telling the NFU conference: “Every day seems to bring a new existential threat to British farming. You deserve better.”

The changes mean inheritance tax will apply on between 20 and 50 per cent of the value of farms worth more than £1 million. One expert said it could affect 90 percent of farms. Tenant farmers may be forced out because large landowners can get alternative tax breaks if the land is used differently.

Tom Bradshaw, president of the National Farmers Union, said: “This has been a disastrous Budget for family farms. Just because a farm is valuable as an asset doesn’t mean those who work on it are rich.”

Shadow farm spokesman Steve Barclay said: “Labour has broken a clear promise.”

Jeremy Clarkson said farmers were “confused” when he broke his silence on the inheritance tax rise announced by Labor in Wednesday’s Budget.

Kirsty Allsopp, a TV presenter and property expert, said: “Rachel Reeves has fucked all farmers, she has ruined their ability to pass on farms to their children.”

The fiscal tax rise could rival the impressive revenue increase of 1993 after Black Wednesday – and could be even larger if measured in current prices rather than as a percentage of GDP.

Budget 2024: key points

Rachel Reeves became the first female Chancellor to present a Budget today, unveiling Labour’s first government economic plan in 14 years.

In his budget, the Chancellor:

Confirmed raising taxes by £40bn
Fuel duty was frozen, although it was expected to increase it, due to the impact on consumers.
Increased employers’ national insurance contributions by 1.2 points to 15 percent from April, while lowering the threshold from £9,100 to £5,000 to raise £25 billion.
Inheritance pensions are now subject to inheritance tax.
Raised the lower capital gains tax rate from 10 percent to 18 percent and the higher rate from 20 percent to 24 percent.
Shows economic growth is forecast to be just 1.6 percent by the end of Labour’s first term.
A crackdown on fraud in the UK’s social care system has been announced as part of reforms aimed at delivering “more sustainable” welfare spending.
He promised to keep the Bank of England’s inflation target at 2 percent.
Confirms that the National Living Wage will rise to £12.21 next year.
She said she was “deeply proud to be the first female Chancellor of the Exchequer in British history.”
Caused an uproar among Conservatives, who said it was “not the first time Labor has had to rebuild Britain.”
He accused the Tories of calling early elections “to avoid difficult choices” when drawing up the budget.
It has announced it will set aside £11.8bn and £1.8bn to pay victims of the tainted blood and post office scandals respectively.

Budget 2024: key points

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