The government has performed a significant U-turn on its controversial inheritance tax plans for farms, dramatically raising the threshold after months of intense protests and political pressure.
A Budget Announcement That Sparked Fury
In her first budget last year, Chancellor Rachel Reeves announced plans to impose a 20% tax on inherited agricultural assets valued over £1 million. The policy was immediately branded a "family farm tax" by critics, who argued it would shatter the tradition of passing farms down through generations.
The announcement triggered protests across the UK, with farmers warning it placed an impossible financial burden on families. The backlash reached Westminster, where Labour MP Markus Campbell-Savours, representing the rural Penrith and Solway seat, was suspended from the party for voting against the tax.
Ministers Listen and Act on Rural Concerns
In a statement released just before Christmas, the Department for Environment, Food and Rural Affairs (Defra) confirmed the major concession. From April, when the tax was due to take effect, the threshold will be £2.5 million, not £1 million.
The department stated ministers had "listened to concerns of the farming community and businesses about the reforms." It added that while the core principle that the most valuable assets should not receive unlimited relief remained, the government was "going further to protect more farms and businesses."
The change means married couples can combine their allowances, shielding estates worth up to £5 million from the levy. According to government estimates, the number of estates affected next year will now be 185, down from an anticipated 375.
Relief and Recognition for Family Farms
Environment Secretary Emma Reynolds said: "We have listened closely to farmers across the country and we are making changes today to protect more ordinary family farms. It’s only right that larger estates contribute more, while we back the farms and trading businesses that are the backbone of Britain’s rural communities."
The announcement was welcomed by farming leaders. National Farmers’ Union president Tom Bradshaw hailed it as a "huge relief to many" that would greatly reduce the tax burden. He expressed thanks that "common sense has prevailed" following constructive meetings with Prime Minister Sir Keir Starmer and Ms Reynolds.
The Labour Rural Research Group, representing Labour MPs in countryside seats, also welcomed the move. Its chair, Suffolk Coastal MP Jenny Riddell-Carpenter, said it meant "fewer families facing impossible choices, and greater certainty that farms can continue to operate, invest, and contribute to our rural economy."
The policy shift follows a stark revelation from Sir Keir Starmer, who told a select committee he had been informed of farmers with terminal illnesses considering suicide to avoid the tax burden on their families.
