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The government recently made a significant retreat on a controversial inheritance tax policy, often referred to by critics as the “farms tax.” This policy had proposed imposing a 20% inheritance tax on family farms starting next April, but following opposition, about half of the farms initially targeted will now be exempt from the tax. The reversal came as a welcome relief to opponents who had campaigned vigorously against the measure.
For over a year since the last Budget announcement, ministers had staunchly defended the policy. However, the shift in approach raises questions about what prompted the change and why it happened at this moment. Persistent protests played a notable role, including frequent tractor convoys with loud demonstrations converging on Parliament Square. The National Farmers’ Union (NFU), a key organizer of these protests, also worked behind the scenes with both Downing Street and the agriculture department to influence the policy’s outcome. Reports suggest that discussions evolved toward modifying the policy rather than abandoning it altogether.
Another important factor contributing to the government’s reversal stems from Labour’s landslide victory last year, which saw an increase in MPs representing rural and semi-rural constituencies. Many of these MPs privately pushed for concessions regarding the inheritance tax. While only one MP voted outright against the policy, more than 30 abstained in a recent parliamentary vote, signaling their unease. Speculation surrounds the timing of the announcement, with one rural rebel noting improved discussions with ministers this month, even though the announcement itself was not foreshadowed.
There are additional speculations involving Labour leader Sir Keir Starmer’s recent appearance before the liaison committee, where he faced tough questions from MPs including Cat Smith and Alistair Carmichael. Both raised concerns that some farmers might take desperate actions, including suicide, to transfer their family farms before the tax took effect. Smith starkly mentioned that farmers were “actively planning to expedite their own deaths,” highlighting the potential human cost. The risk of such tragedies and the negative headlines likely influenced the decision to act before Parliament reconvenes in January.
Downing Street appears eager to address this contentious issue proactively, especially before MPs return after the holidays. However, critics from the Conservative side accuse the government of quietly making the announcement while Parliament was in recess, thus avoiding immediate scrutiny. This approach has drawn criticism, especially given that the government holds a large majority in Parliament. Some Labour MPs have expressed relief over the change but also question why the government pursued a policy projected to bring in relatively minor revenue—around £130 million—when the total annual tax intake stands near £900 billion.
The episode fits a pattern: Treasury policies intended to raise revenue are introduced, followed by public backlash and internal party dissent, eventually resulting in partial withdrawals after political damage has been done. Previous examples include policies on winter fuel and welfare reform, alongside this case involving family farms. While the government has altered its stance, doubts linger regarding its political judgment and ability to anticipate and manage public and parliamentary reactions effectively
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