The proposal to adjust farm inheritance taxes has been met with resistance from a committee of MPs, who are urging a one-year delay in the implementation of the changes. The committee highlighted concerns that the government’s plan to tax inherited agricultural assets valued over £1 million at a reduced rate of 20% was made without proper consultation or assessment of its impact. This move prompted protests across the UK following its announcement in the Autumn Budget.
The Environment, Food and Rural Affairs (Efra) Committee, in a recent report, emphasized that the inheritance tax reforms could disproportionately affect vulnerable farmers. By postponing the policy’s implementation until April 2027, farmers would have more time to seek professional advice. Despite the government stating the importance of the reforms and its commitment to farmers, criticisms continue to mount, with the National Farmers’ Union (NFU) president, Tom Bradshaw, describing the policy as ill-conceived and harmful to older farmers.
While the government maintains that only the top 500 wealthiest farms would be impacted each year, organizations like the NFU and the Country Land and Business Association (CLA) estimate that approximately 70,000 farms could be affected overall. The sudden closure of the Sustainable Farming Incentive (SFI) environmental payments scheme further exacerbated the situation, leading to a loss of trust in the government and threatening the viability of numerous farms. Despite attempts to address the closure by allowing in-progress SFI applications, the Efra committee stressed the importance of restoring trust within the farming community.
Efra committee chairman Alistair Carmichael expressed concerns over the negative impact on farmers’ confidence and well-being, criticizing the government for dismissing farmers’ apprehensions despite widespread protests. The CLA proposed an alternative “clawback” scheme as a solution, suggesting that inheritance tax be applied to assets if sold within a certain period post-death while preserving agricultural and business property reliefs. The government, however, defended its changes by highlighting that the majority of estates would still be exempt from inheritance tax, with the remaining quarter paying a reduced rate over a 10-year interest-free period. Plans for a new SFI scheme are expected to be unveiled following the upcoming spending review
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