Conservatives say Labour has 'stuck two fingers up' to farmers over inheritance tax changes

According to Budget papers, from April 2026 farmers will be able to claim a 100 per cent relief from inheritance tax on the first £1m of combined agricultural and business assets, falling to 50 per cent beyond that. That will effectively leave farmers paying 20 per cent inheritance tax on assets over £1m

Mr Reed, the Environment Secretary, said that the plans outlined in Wednesday’s Budget are a “fair and balanced approach that protects family farms while also fixing the public services those same families rely on”.

However, Conservatives have accused him and Sir Keir Starmer of breaking promises to the rural community.

In 2023, Sir Keir told the NFU conference: “Every day seems to bring a new existential risk to British farming. Losing a farm is not like losing any other business, you can’t come back.”

Shadow Business and Trade Secretary Kevin Hollinrake, said: “Despite the Environment Secretary’s statement that they had ‘no intention” of doing this and the Prime Minister’s comments that they would ‘support farming’ they have done the complete opposite.

“It’s a broken promise with devastating consequences for our family farms.”

The Thirsk and Malton MP, whose father was a hill farmer, claimed inter-generational farms “will have to find hundreds of thousands of pounds or see those farms broken up and sold off”.

The issue has caught fire across Yorkshire and the entire country, with the NFU planning a protest in Westminster.

While Keighley and Ilkley MP, Mr Moore, told The Yorkshire Post that the move “illustrates how out of touch the Labour government is with the agricultural sector”.

The Shadow Defra Minister was a rural practice surveyor before becoming an MP in 2019, so carried out a lot of inheritance tax evaluations.

“Genuinely speaking, farming businesses have an asset base which is worth a lot of money, but in terms of actual cash flow, many farming businesses are right on the brink and are really struggling,” Mr Moore said.

When adding up the value of land, any farm houses, livestock and machinery, the MP explained that “you don’t have to go very far until you get to a whole estate valuation of well over £1m, even if any nil rate thresholds are included”.

“All Labour’s budget will do is protect someone who has got a house and a few fields, or perhaps a very small holding,” he claimed.

“Your average-sized family farm has been specifically targeted by Labour in their budget, and families who have worked hard throughout many generations to hand their asset base down to the next on death will be faced now with potentially huge inheritance tax liability.”

Mr Moore said it will also affect tenanted farmers, as he explained landowners may bring farming in house to reduce their tax liabilities.

Farmers say they have also been clobbered with reductions to the Basic Payment Scheme, as well as wet weather ruining harvests.

Beverley and Holderness Tory MP Graham Stuart added: “This Labour government doesn’t care about farming – it only cares about perpetuating its callous and cruel class war.”

Angela Kirkwood, NFU representative for the East Riding of Yorkshire, said: “Family farms are the backbone of the British countryside and rural economy. 

“I am asking our government to amend their budget announcements to protect the future of British farmers and food production.” 

The CLA has estimated that more than 70,000 farms could be hit by the tax changes.

However, when asked about the concerns, Chancellor Rachel Reeves claimed that “73 per cent of farms and agricultural property will not be affected at all by these changes”.  

She explained: “They will pay no more inheritance tax.

“So, this does protect smaller farms – 27 per cent will be affected, but with a discount on inheritance tax of 20 per cent compared to 40 per cent that others pay.

“We needed to raise money in the budget, and we know that there are a lot of landowners who are very wealthy, some who buy land to avoid paying inheritance tax because previously there was no inheritance tax.

“These are fair and proportionate changes so that anyone with land can pass on above the normal inheritance tax allowances.”

Writing for The Daily Telegraph, Mr Reed said: “I completely understand farmers’ anxiety at any changes. But rural communities need a better NHS, affordable housing and public transport we can provide if we make the system fairer.

“That is why the Labour Government has announced plans to reform agricultural property relief. Only the richest estates will be asked to pay, not small, family farms as some headlines have claimed.

“Look at the detail and you’ll see that the vast majority of farmers will not be affected at all. They will be able to pass the family farm down to their children just as previous generations have always done.”