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The government has confirmed that no further modifications will be made to its revised plans regarding the increase of inheritance tax on farms. This announcement followed a demonstration by farmers who used tractors and horns to disrupt a speech by the environment secretary, Emma Reynolds, at the Oxford Farming Conference. Last month, the government adjusted its initial proposal by raising the inheritance tax threshold on agricultural assets from £1 million to £2.5 million. When questioned about any potential additional changes, Reynolds made it clear that the updated threshold was final, stating, “That’s it, I’m afraid… it is the people in this room who have engaged with us constructively and relatively quietly that have had an influence on this process, not the people sounding their horns.”
The government’s decision to increase the tax threshold was widely viewed as a retreat from its original position amid persistent protests from farmers since Chancellor Rachel Reeves unveiled the budget in 2024. Reynolds emphasized that the government had been attentive to the views of farmers, who have been proactive in sharing their concerns. The planned tax, which would take effect in April, imposes a 20% charge on inherited agricultural assets exceeding the newly set £2.5 million mark, significantly up from the initial £1 million threshold. The rationale behind the policy was to safeguard smaller farms while preventing affluent investors from exploiting farmland as a tax avoidance method. Additionally, the policy allows spouses to transfer assets tax-free, potentially enabling couples to pass on up to £5 million in qualifying assets without incurring inheritance tax.
Despite the increase in the threshold, the policy continues to face opposition from rural stakeholders. The Country Land and Business Association (CLA), representing landowners in England and Wales, has pledged to keep campaigning for the policy’s complete reversal. CLA president Gavin Lane described the government’s partial reversal as “a welcome relief” but also as proof that the initial reforms were “ill-thought through and deeply damaging.” He further stressed that the current policy remains “so dreadful for the rural economy.” Similarly, the National Farmers’ Union (NFU) maintains its opposition to the tax in principle, with president Tom Bradshaw expressing relief over the threshold change but confirming that the organization will continue to seek further adjustments at the next available political opportunity. Bradshaw acknowledged that the update had significantly eased the tax burden for many farming families.
Separately, Environment Secretary Emma Reynolds addressed concerns related to the Sustainable Farming Incentive (SFI), a key environmental payment scheme in England. She promised there would be “no more sudden, unexpected closures” of such programs, referencing last March’s abrupt suspension of the SFI when allocated funds ran out. This closure had drawn strong criticism from the NFU, which called it “another shattering blow to English farms.” Reynolds outlined forthcoming reforms aiming to create a “simpler, fairer and more stable” scheme. Applications for the revamped program will open in June for smaller farms under 50 hectares and those not previously enrolled, with a further application window for all farms launching in September. She reinforced the government’s commitment to linking agricultural payments to environmental benefits, emphasizing that “Protecting the environmental foundations of farming isn’t separate from profitability, it’s essential to it.” Reynolds also mentioned considerations such as reducing the number of funded nature-friendly initiatives, imposing limits on land eligibility, and capping payments. Environmental groups like The Wildlife Trusts have urged that the budget for these schemes be significantly increased to effectively address challenges related to climate change and biodiversity loss
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