Government proposals to levy a charge on inherited agricultural land have been watered down, with the originally announced exemption limit increasing from £1m to £2.5m.
This policy shift is a response to an extended period of demonstrations by agricultural workers and concern from some governing party parliamentarians.
Initial Announcement
At last year's Budget, the Chancellor stated they would start introducing a inheritance charge on inherited farmland and machinery 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 exemption on farmland that had been in place since the 1980s.
The policy would have seen passed-down farmland worth over £1m taxed at 20%, half the standard inheritance tax rate, yielding an estimated £520m annually by 2029.
Ministerial Comments
"We have listened closely to farmers across the country and we are adjusting our policy today to protect more typical family farms."
"It's only right that larger estates shoulder more of the burden, while we stand by the agricultural enterprises that are the lifeblood of Britain's countryside."
Farming Response
The Leader of the National Farmers' Union praised the revision, stating it "removes many family farms from the eye of pernicious policy."
The President of the Country Land and Business Association said: "The government should be commended for acknowledging the shortcomings in the first proposal and changing course."
He added, "However, this announcement only reduces the harm - it doesn't eradicate it entirely. Many family businesses will own enough expensive machinery and land to be valued above the limit, yet still operate on such small returns that this tax burden remains crippling."
Political Fallout
In the 14 months since the original plan, there have been ongoing demonstrations by farmers near Parliament.
Some Labour MPs in the countryside have also voiced unease. At a recent parliamentary vote on the plan, a twelve backbenchers withheld their support and one rebelled.
The Conservative leader posted on social media: "This fight isn't done. Other family businesses are still affected by Labour's tax grab, and we will keep fighting until the tax is removed from them too."
A opposition party MP said: "It is utterly inexcusable that family farmers have been put through over a year of uncertainty and anguish since the government first announced these changes."
The Reform UK spokesperson said: "This cynical U-turn - whilst better than nothing - does little to address the year of anxiety that farmers have faced... with British agriculture hanging by a thread, the government must go further and end this unfair farms tax."
Updated Policy
The government had maintained that the policy would help smaller farms while stopping wealthy investors from buying farmland as a tax loophole.
But, it has now stepped back from the first announcement lifting the exemption limit to £2.5m.
Alongside an allowance 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 qualifying assets.
