Ministers scales back death duty policy for farms

Treasury intentions to tax passed-down farming assets have been watered down, with the planned threshold increasing from £1m to £2.5m.

This policy shift follows an extended period of protests by farmers and unease from some governing party MPs.

Initial Announcement

At last year's Budget, the Chancellor announced they would start applying a inheritance charge on inherited farming businesses worth more than £1m from the 2026 tax year.

In her first fiscal event in 2024, Chancellor Rachel Reeves declared she would be ending the tax relief on agricultural assets that had been in place since the 1980s.

The measure would have seen passed-down farmland worth over £1m subject to a levy at 20%, half the standard inheritance tax rate, generating an projected £520m annually by 2029.

Official Announcement

"We have paid close attention to the farming community across the country and we are making changes today to safeguard more ordinary family farms."

"It's only just that wealthier landowners contribute more, while we back the farms and trading businesses that are the backbone of Britain's countryside."

Farming Response

The Head of the National Farmers' Union praised the change, commenting it "removes many family farms from the threat of harmful tax."

The Head of the Country Land and Business Association said: "The government deserves credit for acknowledging the problems in the initial plan and adjusting its approach."

He continued, "That said, this concession only mitigates the impact - it doesn't remove it totally. Many family businesses will own enough high-value equipment and land to be priced above the threshold, yet still operate on such small returns that this charge remains crippling."

Political Fallout

In the year-plus since the initial proposal, there have been ongoing demonstrations by farmers outside Parliament.

Some Labour MPs in the countryside have also raised objections. At a recent division in the Commons on the plan, a dozen backbenchers did not vote and one voted against.

The Conservative leader commented on a social platform: "This campaign isn't finished. Other family businesses are still impacted by Labour's levy, and we will keep pushing until the tax is removed from them too."

A Liberal Democrat spokesperson stated: "It is totally unforgivable that family farmers have been put through over a year of uncertainty and anguish since the government first proposed these changes."

The political party deputy leader remarked: "This calculated U-turn - whilst better than nothing - does little to address the year of anxiety that farmers have faced... with British agriculture under severe pressure, the government must go further and scrap this callous agricultural levy."

New Terms

The government had contended that the change would help smaller farms while preventing large estates from buying farmland as a tax loophole.

But, it has now stepped back from the original proposal raising the tax-free amount to £2.5m.

Alongside an provision which allows farmers to pass on assets to their husbands or wives tax-free, this new revised threshold means a married pair could pass on up to £5m in applicable assets.