Government waters down farm inheritance tax plan

Government proposals to tax inherited farmland have been watered down, with the planned threshold increasing from £1m to £2.5m.

The climbdown follows months of protests by farmers and concern from some Labour backbenchers.

At last year’s Budget, ministers said they would start imposing a 20% tax on inherited agricultural assets worth more than £1m from April 2026.

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.”

Head of the National Farmers’ Union Tom Bradshaw welcomed the change, telling BBC Radio 5 Live it “takes out many family farms from the eye of pernicious storm”.

Gavin Lane, President of the Country Land and Business Association, said: “The government deserves credit for recognising the flaws in the original policy and changing course.

“However, this announcement only limits the damage – it doesn’t eradicate it entirely.

“Many family businesses will own enough expensive machinery and land to be valued above the threshold, yet still operate on such narrow profit margins that this tax burden remains unaffordable.”