Farmers are hitting back against Labour’s rumoured U-turn on its inheritance tax (IHT) reforms with the industry’s leading union claiming there are “better options on the table”.
During the Budget, Chancellor Rachel Reeves announces sweeping tax reforms which have increased peoples’ liability for IHT, National Insurance and capital gains tax (CGT).
Earlier this week, thousands of farmers marched outside Downing Street in protest against proposed changes to inheritance tax rules outlined in the fiscal statement.
As it stands, inherited agricultural assets worth more than £1million will now be charged a levy from HM Revenue and Customs (HMRC) at a rate of 20 per cent.
Despite this being half the usual rate charge on estates, these asserts were previously exempt from paying inheritance tax.
Yesterday, The Guardian reported that Reeves and Prime Minister Keir Starmer had seemingly capitulated in the face of “militant action” from farmers.
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Farmers are hitting back at the rumoured U-turn to inheritance tax changes
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It is understood is floating a change to the new IHT rules to make it easier for those 80 and over to pass down their farm to loved ones without incurring the 20 per cent levy.
However, the National Farmers Union is sounding the alarm that these alterations to Budget policy may not be enough for farmers in distress.
Speaking to GB News, NFU president Tom Edwards broke down what Labour needs to do to win back the trust of farming communities.
He explained: “I would prefer any exemption before April 2026, when the rules come in, so you can make the transfer and don’t have to survive the seven years, but we have far better options on the table if they come out for consultation.
“We could come up with a policy that would answer the questions but be far better for the industry.”
According to the NFU’s own modelling, 75 per cent of commercial family farms will be above the £1million threshold.
In light of this, the union is calling for the policy to be looked at in “across numerous areas”.
Currently, the Treasury is carrying out a review into the impact of how the tax overhaul will impact vital stakeholders in the years ahead.
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Notably, ministers are reportedly examining the impact of how said changes will effect active and small-sized farms. Farmers met the Treasury on Thursday and proposed that older farmers should be exempt from gifting rules.
A HM Treasury spokesperson told GB News : “We remain committed to fully implementing the policy and are not considering mitigations.”
During an interview with the BBC’s Victoria Derbyshire, Exchequer Secretary to the Treasury James Murray stated: “No, we’re not going to make any changes. This is the policy that the Chancellor announced, and this is the policy of the government.
“And I was with the Secretary of State from Defra yesterday talking to MPs, and we were both setting out the government policy and how it will work. What’s important is to emphasise that this is a proportionate response, to make sure that we protect small family farms, whilst also raising the revenue we need to support public services which will benefit rural communities too.”