Britain’s government has announced a significant change to its inheritance tax plans for farmers, scaling back a policy that triggered months of protests across the country.
As per a Reuters report, the decision follows sustained opposition from agricultural groups after an inheritance tax charge on farms was announced in 2024, ending a long-standing exemption for agricultural families.
From April, higher thresholds and revised relief rules will sharply reduce the number of farms facing increased tax bills.
The move marks the latest policy adjustment under Prime Minister Keir Starmer, as ministers seek to balance revenue needs with pressure from rural communities.
Why was the policy revised?
Under the revised framework, the threshold for individual inheritance tax relief on agricultural property will rise to £2.5 million from £1 million.
This change is designed to protect more family-owned farms from inheritance tax liabilities when assets are passed on.
The government said it reviewed feedback from the farming sector after regular demonstrations, including tractor-led protests in London, highlighted concerns about the impact on family farms and food production, notes Reuters.
The original proposal aimed to raise additional revenue for stretched public services by ending the exemption from inheritance tax for agricultural families from next year.
Farmers warned that the measure would force land sales, weaken rural businesses, and disrupt domestic food supply chains.
What the new rules mean
From April, agricultural assets will receive 100% relief up to the new £2.5 million threshold, with 50% relief applied to assets above that level.
The updated rules also allow spouses or civil partners to pass on up to £5 million in farm assets between them without incurring additional inheritance tax.
According to government estimates, around 85% of estates claiming agricultural property relief in the 2026/27 year, including those also claiming business property relief, will pay no more inheritance tax than before the changes.
This suggests the impact of the tax will be concentrated on larger estates rather than smaller, family-run operations.
Reaction from the farming sector
The farming community has been vocal since the policy was first announced in 2024.
The National Farmers Union has led opposition to the original plan, arguing that it placed an unfair burden on agricultural families.
Its leadership said the revised policy moves closer to safeguarding family farms, which form the backbone of rural economies across Britain, according to Reuters.
The government said the revisions reflect extensive consultation with farmers and industry representatives, while maintaining that larger estates should still contribute more through the tax system.
Political context and next steps
This policy shift adds to a series of reversals by Starmer’s government.
In July, ministers backed away from proposed welfare spending cuts, and in June, they scaled back plans to reduce energy bill subsidies for elderly households.
Together, these moves point to a more cautious approach as the government responds to public and sector-specific pressure.
The inheritance tax changes are set to take effect from April, with the government continuing to argue that the revised framework strikes a balance between protecting family farms and ensuring sufficient funding for public services.
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