Sir Keir Starmer's Labour government has significantly diluted its controversial plans for an inheritance tax levy on farmers, following a furious backlash from rural communities.
Policy Shift After Rural Anger
The original proposal, unveiled by Chancellor Rachel Reeves in the 2024 Budget, would have seen farmers liable for inheritance tax at a rate of 20 per cent on agricultural property and land valued above £1 million. This was set to come into force from April.
However, facing widespread condemnation, the Department for Environment, Food and Rural Affairs (Defra) has now announced a major concession. The threshold at which the tax applies has been raised to £2.5 million.
Government Admits to Listening to Concerns
In a statement acknowledging the strength of feeling, a government spokesman confirmed the change was a direct response to feedback. They stated that ministers had "listened to concerns of the farming community" before deciding to act.
The revised policy is expected to have a substantial impact on its reach. According to official estimates, the number of farms affected by the changes to Agricultural Property Relief will be roughly halved by this adjustment.
Calls for Complete Scrapping Likely to Continue
While this move offers immediate relief to many medium-sized farm businesses, it is unlikely to quell the opposition entirely. Campaigners and rural groups are expected to maintain pressure on the government, with calls for the inheritance tax raid to be scrapped completely set to continue.
The climbdown represents a significant shift in Labour's approach to rural policymaking and highlights the potent political force of the farming lobby. The government will hope this concession draws a line under the issue, but the underlying tension over taxation of agricultural assets remains.
