Farmers’ leaders are urging the Prime Minister to reconsider changes to agricultural inheritance tax (IHT) that will come into effect in April 2026. The new rules would make inherited assets worth over £1m liable for a 20% IHT rate, sparking concerns among farmers about being forced to sell up to pay the tax.
The National Farmers’ Union (NFU) president Tom Bradshaw told MPs that the current policy would have a “very different proposal” if it focused on personal wealth rather than business wealth. He emphasized the importance of supporting farmers during this challenging time, saying “no policy should ever be published that has an unintended side effect like taking farmer’s lives.”
Farmers’ leaders argue that while they may be asset-rich in terms of land and livestock, many are cash-poor. The changes to IHT will make it difficult for them to pass on their farms, with some estates worth up to £3m facing reduced allowances.
Tax experts have warned that the 20% IHT rate will have a limited impact on land price inflation. Dr Arun Advani, director of think tank CenTax, said “the 20% IHT rate is still much more attractive than other assets.” However, Stuart Maggs, head of tax at law firm Howes Percival, pointed out that agricultural estates typically earn a low return of around 0.5-1%, making it unaffordable for many farmers.
The government has announced plans to support UK food security through new environmental land management schemes and payments for nature-friendly farming activities. However, the National Farmers’ Union and other groups are pressing the Prime Minister to rethink the inheritance tax policy to avoid forcing vulnerable farmers out of business.
Source: https://www.bbc.com/news/articles/c9vky90xm80o