‘Death of the family farm’: Inheritance tax hike would devastate farmers already stretched to breaking point
Inheritance tax: scrapping agricultural relief in budget would devastate farms, union boss warns
Getty (Reeves) and PA (lambs)
The ‘backbone of British farming is under threat’ as Labour considers scrapping farmers’ inheritance tax relief in the upcoming budget.
Scrapping Agricultural Property Relief (APR), which exempts farmers from paying a 40% tax on assets valued above £325,000 when they die, would mean they could not pass their farms to the next generation without incurring a hefty tax bill.
James Grindal, a farmer in South Leicestershire, said: “Scrapping APR relief would mean the death of my family farm. Like many small farms, we survive on slim margins and wouldn’t have the funds to cover this hefty tax.
“I’ve spent years building a farm I can pass down through generations. It’s not just a business, but a way of life, a culture and a legacy. To see that wiped out with one single tax bill would be devastating.
“As farmers, we want to feed the nation but cannot do that if we’re forced to sell our land. Labour campaigned as the party of the countryside. This will be the first major test of whether they truly have our backs.”
Di Clements, a dairy farmer in south west Wales, said of Labour potentially scrapping APR: "This would be the final straw for many family farms and have fatal consequences for rural Britain and our food security.
"We always knew Labour never cared for farmers, but if the chancellor does this she will have proved us right."
The potential scrapping of APR comes as Rachel Reeves scrambles to fill a “£40billion black hole” in the nation’s finances.
The Chancellor has committed “to not increase taxes on working people”, ruling out rises in National Insurance, Income Tax, or VAT, but leaving inheritance tax- and specifically abolishing APR- as a possible option for raising cash.
Victoria Vyvyan, President of the Country Land and Business Association, commented: "APR is essential, not a loophole. Scrapping it would threaten the future of family farms across the country.
“Without it, countless farmers would be forced to sell land to cover inheritance taxes, endangering our rural way of life, and the nation's food security.
“Labour has said it’s the party of the countryside. Farmers need clear assurances that this commitment will last beyond the government's first year in office.”
Farmers protesting on Westminster Bridge earlier this year to raise awareness of their plight
PA
This comes after a poll of more than 500 farmers and country landowners found 86 per cent of respondents said it was ‘likely’ that some or all of their land would have to be sold upon their death, if inheritance tax reliefs are scrapped.
National Farming Union President Tom Bradshaw said: “This “Family Farm Tax”, which is what removing APR amounts to, could be too much for some farming businesses which are already struggling with numerous challenges.
“Farming is often a generational business, and APR is what makes it possible for small family farms to pass from one generation to another.
“Major APR changes would put at risk many farming families’ succession plans and consequently undermine the government’s own ambitions for food and environmental security.”
Government statistics show 17% of UK farms failed to make a profit in 2022/23, while 59% made a profit of less than £50,000, leaving little scope to pay inheritance tax out of farm income.
Farmer and Leader of the Welsh Conservatives Andrew RT Davies MS said: “Scrapping this relief would be devastating for Welsh farming families and a risk to our food security.
“Labour is already piling the regulation on our rural communities, forcing them to do the heavy lifting, with arbitrary tree planting targets on prime agricultural land.
“Conservatives oppose hitting our farming sector with a death tax that will only drive our home-grown capacity for food production overseas.”
Leader of the Welsh Conservatives, Andrew RT Davies, makes a speech on the steps of the Senedd as farmers protested over planned changes to farming subsidies.
PA
NFU analysis of APR suggests that scrapping it would only save the Treasury £120 million a year.
Mr Bradshaw added: “We’ve given the Treasury the details and evidence for our concerns and we stand ready to meet ministers and officials again, at any time, to reinforce the point that a Family Farm Tax could push many small family farming businesses over the edge.”
A HM Treasury spokesperson said: “We do not comment on speculation around tax changes outside of fiscal events.”
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Farming has risen up the news agenda in recent years with prominent personalities like TV Presenter Jeremy Clarkson and former rugby referee Nigel Owens highlighting the plight of farmers.
Clarkson has been specifically scathing of Labour on farming. Before the general election, the former Top Gear presenter wrote in the Sun: "Their [Labour] manifesto contains just 87 words on farming.
"It has even been suggested that inheritance tax will have to be paid on farmland.
"Which means that in about 20 years' time, there will be no farmland.”
Jeremy Clarkson, perhaps Britain's most famous farmer, has been scathing of Labour on farming
AMAZON STUDIOSWriting in the Times, Clarkson said: “Almost every government in the civilised world seems determined to ethnically cleanse farmers from the countryside.”
He believes the new Labour cabinet don’t understand Britain’s rural economy. “I don’t think any of them have set foot outside Kentish Town [north London] for the last 35 years,” he wrote.
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