Exclusive:Government 'listened to concerns' on inheritance tax, Rachel Reeves says
The increase in the inheritance tax threshold for farmers and agricultural businesses shows “this is a Government that listens”, the Chancellor has claimed.
In her first budget in 2024, Rachel Reeves announced she was reforming agricultural (APR) and business property relief (BPR), the inheritance tax discount given to the farming industry to allow farms to be passed down through the generations.
The Chancellor said she was introducing a discounted rate on businesses valued at over £1m, a hugely contentious move that farmers said would force them to sell off land and change the fabric of the British countryside for good.
One inquest revealed that a farmer had taken his own life when worried about the April deadline.
Just before Christmas, the Government announced that it was increasing the threshold to £2.5m, with married couples allowed to combine their relief to £5m.
This has pushed many of the small and medium-sized family farms out of the scope of the policy.
In an interview this week, The Yorkshire Post asked Ms Reeves if she had a message for those farmers who had previously been caught up in the reforms.
The Chancellor said: “There are very few people saying that we shouldn’t have any inheritance tax on their estates regardless of their size.
“We have listened to what people have said and we have lifted that limit to £2.5m, and as a result a lot fewer farms will be impacted by this.
“This is a government that listens, we do believe in the principle that if you are a big landowner, you should make a contribution, including through inheritance tax.
“We have listened to the concerns of people who are just above that threshold and therefore increased it.”
Ms Reeves previously came under fire for failing to meet with the National Farmers’ Union or the Country Land and Business Association (CLA) after making the controversial changes.
Instead, the farming groups engaged with the now-Chief Secretary to the Treasury James Murray.
NFU President Tom Bradshaw previously said: “The Chancellor should look us in the eyes and tell us she is right.”
After the watering down of the policy, CLA President Gavin Lane commented: “We thank Ministers for the constructive dialogue, we look forward to working in partnership to grow the rural economy, whilst continuing to call for these reforms to be scrapped entirely."