Families could be forced to ‘split’ farm due to ‘terrible’ tax plans, union warns

Angry farmers left behind by Labour’s budget are calling on the government to quickly scrap what they call a “horrible” tax on family farms.

The National Farmers’ Union (NFU) said British farmers and producers would take part in a massive lobbying of their MPs under plans outlined on Wednesday.

According to budget documents, from April 2026 farmers will be able to claim a 100% exemption from inheritance tax on the first £1 million of combined farming and business assets, with the rate falling to 50% thereafter.

The government is “restricting the generosity of agricultural aid” in a bid to make the inheritance tax system “fairer”.

The government will also commit almost £600 million to flood defenses and farming projects in 2024/25, but warned that these plans “will need to be reviewed” for future years.

NFU President Tom Bradshaw said: “Farmers and producers have been left shocked by the changes announced in the Budget, which demonstrate a fundamental misunderstanding of how the UK farming sector is formed and managed.”

Mr Bradshaw, who is meeting Environment Secretary Steve Reid on Monday, said current plans to change the Agricultural Property Relief (APR) and Business Property Relief (BPR) “need to be scrapped and quickly”.

Mr Bradshaw added: “Farmers are rightly unhappy and concerned about their future and the future of their family farms, having been assured by ministers in the run-up to the Budget that changes to APR and BPR were not on the table.

“Treasury figures claiming that only one in four UK farms will be affected are misleading.

“The £1 million annual interest rate cap shows how little the government understands this sector. Very few viable farms will cost less than £1 million, but many small holdings and houses with a few acres dedicated to grazing may be.

“The asset value of real food farms will be high given the size they need to remain a viable business; but this is the cost of the asset, it does not reflect its profitability, which is often and increasingly very low.

“It is clear that the government does not understand that family farms are not just small farms and that just because a farm is an asset does not mean those who work on it are rich.

“I said every penny the Chancellor saves will come directly from the next generation having to destroy their family farm. This simply shouldn’t happen.

“MPs need to understand the consequences of these actions, which is why we will mobilize our members for mass lobbying in the coming weeks.

“British farmers will ask their MPs to look them in the eye and tell them if they support this.

“There is still time for the government to admit it is wrong and I want to tell ministers they must do the right thing and scrap this terrible tax on family farms.”

Farmers would have to pay hundreds of thousands of pounds in inheritance tax under Labour’s plans, the Conservative Party said.

Shadow Business Secretary Kevin Hollinrake warned Labor MPs planning to have a pint at the local pub and mingle with farmers this weekend to “think again”, while Greg Smith, Conservative MP for Mid Buckinghamshire , called the budget “completely frontal.” financial attack on our farmers.”

Tim Farron, the Liberal Democrats’ rural affairs spokesman, previously criticized changes to farm property benefits, warning of a “death knell” for farmers.

The issue was raised repeatedly in the House of Commons on Thursday, with Business Secretary Douglas Alexander defending the Government’s inheritance tax reform, saying “difficult and necessary choices” had to be made.