There has been extensive discussion about the changes to Agricultural Property Relief, announced in the Budget on 30 October.
The government inherited a £22 billion hole in the public finances, and we had to make difficult decisions at the Budget to fund the public services that farmers and families in rural communities rely on.
The changes we made are balanced and proportionate and around 500 claims a year are expected to be affected. These figures are based on the latest available information from HMRC on actual claims for Agricultural Property Relief.
A detailed explainer has been published by the Treasury.
In a joint statement issued, Chancellor of the Exchequer Rachel Reeves and Secretary of State for Environment, Food and Rural Affairs, Steve Reed said:
Farmers are the backbone of Britain, and we recognise the strength of feeling expressed by farming and rural communities in recent weeks. We are steadfast in our commitment to Britain’s farming industry because food security is national security.
It's why we are investing £5 billion into farming over the next two years – the largest amount ever directed towards sustainable food production, rural economic growth and nature’s recovery in our country’s history.
But with public services crumbling and a £22 billion fiscal hole that this Government inherited, we have taken difficult decisions.
The reforms to Agricultural Property Relief ensure that wealthier estates and the most valuable farms pay their fair share to invest in our schools and health services that farmers and families in rural communities rely on
62 comments
Comment by Edward posted on
Absolute rubbish. Trying to conflate an ideological decision to destroy our farming industry with raising money for public services is disingenuous, particularly when it is predicted to raise so very little for the Treasury but cause so much disproportionate harm to the family farms at the heart of our rural communities and the nation’s food security.
It is a direct break of a pre-election promise and it is shameful that the government continue to mislead the public about how severe the effect will be by using a narrow set of statistics that have been widely discredited for their total lack of context. What you say about the farming budget is again misleading as it is a real terms cut in funding.
At least be honest about the impact of this decision rather than trying to hide behind sham data. The British public deserve better than being gaslighted by our government.
Comment by William James posted on
Personally I think that all forms of inheritance tax should be abolished and not just for Farmers.
Comment by jonathan Billington posted on
the government did not inherit a £22bn hole in the public finances, you should NOT be spreading misinformation on this site.
Comment by Catherine Nichols posted on
Why ,Why?? Keir Starmer lied to the rural community. It's not just farmers its all the jobs associated with the farming industry. Why would anyone want to invest and improve their Farm business when the treasury is going to take it from us.
We pay our taxes fairly . It seems to be alot of people have implied we pay no tax.
Sadly lots of farmers pay no tax as their income is below the tax threshold. However their Farm is above the IHT threshold. Please explain how that is fair. Inevitably they will have to sell. Lose their home and livelihood.
This is the most short sighted budget l have ever seen.
Being an ex Band 7 nurse l have witnessed the public sector at its wasteful best. Throwing extra money with no reform is criminal or negligent at its very best.
The NHS is an unfundable monster and until someone takes it in hand there will no improvement for either the workers or patients.
The Labour government are hell bent on ruining thousands of lives by breaking up family farms to supposedly support the broken NHS. Which the NHS won't take responsibility for.
Comment by Ian Samuel posted on
There should be a higher threshold for agricultural property relief, say £5 million in the short term. The current proposal will have profound effect on farms in difficult circumstances where there is a single farmer or one in poor health. It will have a negative impact on food production in this country. To introduce this tax at this level at relatively short notice when the government have said they weren't going to change it is a breach of trust. Tax should be levied on farms sold for development and roll over relief. There would be little criticism of these measures.
Comment by Richard Fairbanks posted on
Farmers have been compelled to take low prices for the food they produce,by successive governments. Because all politicians want the shelves in food shops full of cheap food as empty shelves will make the general population restless and government unsustainable. As a trade of for this trust to maintain food supply, exclusive tax systems were put in place to help farm business sustainability and help successive generations carry on farming in a seamless manner after their death. This trust has been broken by the present labour government and they will reap what they have sown. Richard Fairbanks
Comment by Philip Cavanagh posted on
Hugh Grosvenor inherited £10,000,000,000 in 2016 and didn't pay a penny in inheritance tax. There are many such estates throughout the UK. It's highly offensive that the government chooses to target the middle whilst leaving the truley wealthy completely outside the tax system. Disgraceful.
Comment by Andy Robson posted on
500 farms a year, based on HMRC claims for Apr - what about the trading assets that were previously covered by Bpr? A lot more farms will be affected as the £1m allowance will often be largely or completely used for trading assets, so the 500 from HMRC is wrong.
Comment by Melvyn Mckeown posted on
U keep going over the same old story off 22 billion when u have created a large proportion off it yourself, when will u stand up and be responsible for your actions,all the pledges you made have been lies ,people are turning against u now
Comment by Barbara Robinson posted on
Targeting the wrong people. Generational family farms will get hit, but big property owners can afford financial and legal advice to avoid tax.
Comment by Andrew Whiley posted on
As you say it may affect no more than 500 estates per year and they may be able offset up to £3m pounds depending upon circumstances.
BUT I do not believe that Gov UK has done a proper study of asset values on a typical family farm.
Machinery, buildings, diversification, workers cottages could well swallow that £3m without considering the land value. Even now most family farms annual profit/loss rely on the subsidy paid. And with the subsidy levels being reduced and/or manipulated by design to be less, paying off proposed inheritance tax will not be possible even over a 10 year period. (I trust it will be interest free). This means sale of land to the big players or building contractors reducing the UK food production capacity.
I believe that you should reconsider this tax
and if necessary make it a blanket tax free value of
a much higher figure to deter the very big players from destroying the UK family farms.
Comment by Janet Lewis posted on
Land prices are massively inflated by tax avoiders like Clarkson, Dyson etc. On paper small to middling farms appear to be of high value whilst in reality many farmers are working very long hours for very small returns - not helped by global events increasing the cost of inputs and the impacts of Brexit and climate change.
I think you need to have the humility to listen to farmers. Reconsider the threshold that you have set which is patently too low. Find some other way of stopping tax avoidance. It will extremely concerning for the environment and food quality if a perverse outcome of this change is an increase in industrial farming.
Comment by Roger Bunting posted on
As a miners son who wanted to farm for a living my aim when leaving school was to get a farm of my own!
It soon became clear that the chance of renting a farm was very slim and there was no chance of inheriting one. My only chance was to work hard and forget foreign holidays and high life and dedicate my efforts to buying my own.
I am now aged eighty and own three farms totalling four hundred and sixty five acres and am proud to think that I can give my family a better start than I had.
However proposed changes in the last budget mean that the tools to allow this to happen have been taken from us on the pretence of penalising anyone who has earned money should have it taken away!
This is not true socialism !
Comment by George Bland posted on
This statement is entirely misleading and should be removed immediately.
The use of separate APR and BPR statistics in the context of a proposed combined cap of £1m across both APR and BPR reliefs renders the HMRC statistics completely invalid given almost all genuine farmers will be claiming both (and therefore will result in significantly more than 500 claims per year being affected).
There is also no evidence given as to how the 2020-2021 figures compare to other years so viewed in isolation are again potentially misleading.
Comment by James Howie posted on
The speed of this change will adversly affect people whose elderly relatives do not have time to plan for this change. Making it grossly unfair. While others will, by the luck of their d.o.b. have time to gift and so avoid it. Again I say grossly unfair.
Comment by James Stewart posted on
This broadbrush approach will force productive farms to sell land to pay this tax. It will discourage young farmers from entering the industry. The threshold is too low. Many farmers realise this by counting up the market value of their assets. If you value farmers and food security for future generations you should reverse this immediately. Every farmer I know and I hear from are deeply concerned and I am yet to know a farmer who thinks this is a good idea. My question is do you know better than farmers on the ground? I and the 6000+ members of the farming community in Northern Ireland attended a protest against this proposed changes. It is wrong and I am concerned for the food security of future generations. Change course immediately.
Comment by Gary john Whitcroft posted on
Why doesn't the government stop the intake of immigrants,by doing this they would be saving on benefits which would fill a very big hole in the purse!!
Comment by Ian Papworth posted on
Well thought through statement but it won't cut through the media message being backed by rich landowners. Family farmers are being used by rich landowners to stop this policy
Comment by Christopher Beatty posted on
It spells the end for me
Comment by Gillian Sarah Mills posted on
What utter rubbish!!!
Comment by Ted Jenkinson posted on
As a farmer who has already been forced to take a part time job in the NHS the labour goverment has rushed into ill thought out policy.
The Inheritance tax threshhold should be 5 million then tapper the rate.
The Key to the NHS is listen to the workers.... changing working shifts from 8hrs to 12.5 hrs for a working mother with maybe 20 years experience means she will go get that easier, better paid, office job even when it is not where they really want to be.
Comment by Joe posted on
The £1m threshold is too low It should be 5m, you cannot buy a farm for £1m or you could allow the first 500 acres and the business tax free. Something needs changing otherwise the British landscape will.
Comment by Daniel Scott posted on
Labour said that they would not introduce this tax, before their election, after the election and before their budget. They lied.
They are lying now.
They are too arrogant to admit they've made an accounting error and don't care about the misery caused to a small number of people that they don't understand.
Comment by Philip Wallis posted on
I support the government in this.Farm owners privileged position as exempt from IHT since the 1980s has never been justified.With this change they are still in an enviable position compared to all other property owners.This change simply means that farm owners like everyone else now need to forward plan passing on their assets before they die and trust their children/beneficiaries.
Comment by Sir kier stammer posted on
Putting pressure on people in there 80s seems to be a common theme for the labour party very short sighted polic y not thought out typical for people who have never ran any type of business
Comment by Andrew child posted on
Would have made more sense to exclude the value of farmer's working capital ( ie livestock and farm machinery ) from the £1m limit if the aim was to clamp down on tax evasion.present format will
Undoubtedly affect currently viable small and medium sized family farms in a negative way. Land values will fall and some heavily geared farms may end up in negative equity.
Comment by George Orwell posted on
And all animals are created equal
Comment by John lawler posted on
Our farm indirectly employ contractors for the summer harvest. Vets when our animals are ill agricultural engineers when our machinery is faulty or if we need to purchase equipment.
Land agents for additional straw or hay
There is a whole industry surviving off the backs of farmers this is the real countryside and how it
Works
Comment by owen Lort-Phillips posted on
How about you just take 1 billion out of the 5 billion and that will reduce the need to levy the 500 million you say you going to raise from this tax.
Also stop wasting 100 million on bat tunnels..
Offer a phase in period of your family farm tax so folk have time to adjust to your reality.
Comment by Alison posted on
Please consider the consequences of all your actions and long term effects on farming families, communities, local businesses working with the farms .None of these farms can generate a income to pay this tax and so a government land grab removing land and assets from families who have worked hard all their lives. This simply cannot be allowed to continue.
Comment by Andrew Jones posted on
Just hope that Rachel Reeves didn't have any input into this statement, it will probably have to be quietly Edited to tell the truth! Has this statement been fact checked just incase?
Comment by Andrew Morris posted on
This tax is going to finish farming in the UK this government is getting at the people in the countryside not only farmers. They given in to the train drivers and the doctors .pay demands. We all need food which comes from the countryside which we need three times a day
Comment by William Riccini posted on
Please, just raise the threshold from 1 million to something more reasonable. You will still catch the rich people who are buying land to avoid inheritance tax and genuine farmers won't be affected.
It's only right that those wealthiest landowners actively seeking to avoid inheritance tax should be taxed, they have abused the honour of land ownership
Comment by Caroline S posted on
Without the incentive of APR to farm the land wealthy landowners are likely to use their land for other more profitable things such as solar panels or houses, meaning the land will no longer be producing food.
That is the purpose of APR and the implications of reducing it are far reaching for food security and the economy generally. It is very concerning that the government do not know this!
Comment by P clark posted on
Rubbish !!!!! You 're killing a productive and essential part of uk economy and food security.!! Stop telling lies and try reducing government waste, that would be more effective
Comment by Ian Muir posted on
Why don’t you invest 4.5 billion instead of 5 billion, then you wouldn’t have to charge inheritance tax, upsetting the entire farming community.
Comment by Paul house posted on
The government has shafted old people and farmers to give to their union mates and provide for every illegal immigrant to use our NHS that they have not contributed towards why can't we look after our own first
Comment by Norman Fulton posted on
Fatally flawed analysis. Every farm transfers to the next generation every 25-30 years. A sub £1 million farm is a part-time unit at best at current market prices. Therefore, farms accounting for a large majority of UK agricultural production will face a punitive tax charge every 25-30 years. Farming does not generate the returns that will enable this tax burden to be paid from profits while continuing to support a family and ongoing investment. This policy will have a profound impact on farm structures and the land market, including the financial security underpinning current and future bank lending to the sector. The suggestion that personal £325k tax free allowance is a get out of jail card is disingenuous. This allowance is available to every citizen to pass on accumulated and unencumbered wealth (savings, investments, holiday homes, etc) to the next generation. But HMG indicates that farmers will instead need to use this to pass on the assets necessary to sustain a farm. A double standard.
Comment by A walton posted on
Difficult decisions! Reeves false CV, no business nouse in the Cabinet, huge pay rises for Unions that bankroll Labour (with no revised working practices), Bonkers green policy that is unreal in scale, cost and timeline!
NI hit in employers that will cost jobs and cause inflation, house building policy when we have far too few tradesmen and old style building practices, Too many people allowed to enter UK who don’t contribute to the economy, obesity costing the NHS millions and lost work, woke expenditure on woke staff who don’t deliver effect ……. Need I go on?
Labour have lied, taken money from pensioners and are doomed to fail.
Comment by Jonathan Dickson posted on
To release this statement on the day of the protest,like it clarifies the situation and makes it okay, is an insult. My family own and run a small 250 acre farm but the inheritance tax change will drive us out of business when my father dies, he is 82. We will lose our home, business, culture and heritage which has been in our family for nearly 100 yrs. Last year we locked into another stewardship scheme, prioritising the environment, natural habitat over profit and financial gain. So the announcement of IHT is making us question this decision.
The 500 per year stat is being thrown around like it's a small number. The 500 per year, every year will be the destruction of 500 farms every year until none are left. Like the prime minister said last year "when a farm is lost, it doesn't come back"
What's the point in the £5 billion if we are all going out of business. Any farms that do try and keep going while trying to pay the inheritance tax bill won't be able to invest or spend money on anything else other than servicing the IHT debt. This will drain turnover in the rural economy.
This decision is a disaster and the despair amongst farmers was clear to see. If you want to get billionaires using farms to avoid tax then set the threshold much higher or target those that farming isn't the deceased persons main source of income.
Please change this decision.
Comment by Richard Fisk posted on
Inheritance tax will destroy our farm lam fourth generation and I have a son in business with me .We are farming 750acres which will have to be sold to pay the tax.lf you carry your plans out the skills of farming will be lost as there are very few young people wanting to work on farms as we have found. As a result we are producing less food There is nothing worse than a hungry nation NONE OF YOU HAVE ENDURE D A WAR
Comment by Sandy posted on
A tax of envy that will destroy the businesses that are going to be forced to pay it.
Comment by Glenys Hird posted on
This Labour Government have shown themselves to be spiteful, idealogical zealots.
An utter disgrace. They should be thoroughly ashamed.
Comment by Roger Evans posted on
Once again a knee jerk reaction without doing their homework or consultation with those who matter, the farmers. Just like all the other panic measures that have been taken by this government.
What will the government do to rescue the farmers who are about to fall by the wayside
Comment by Phil Lees posted on
Whilst I appreciate the agricultural inheritance has been used to minimise tax paid by the wealthy the line has been drawn too low and will penalise many famiky farms whose income dies not warrant such a tax. Increase the limit to £5m and oritect our family farms who are such an important oart of our rural communities. Once they go they will never return.
Comment by gillian allen posted on
How will a farmer get a share of the 5 billion? Not explained.
Comment by N V M Walker posted on
My comment is considered and moderate.
Comment by N V M Walker posted on
5p on the long held up increase in fuel duty would have more than covered any funds raised from a policy of destroying farms and families established by generations of hard work and investment who in current circumstances have no realistic chance of achieving a cash income sufficient to generate the necessary funds to pay IHT on a asset the value of which they have no control.
Comment by Humphrey Mills posted on
You haven't said what you class as an average farm.
When you do, have a look at the level of income expected from that type of farm and the people dependent on the income from that farm.
Next, please consider whether those people could afford to pay the tax you are proposing. If the only way to pay this tax is to sell land and reduce the size of the farm, this tax is not sustainable.
The economics of farming are difficult enough without this extra tax.
Alternatively, find a £1m farm and see how much profit or income can be derived from that.
Comment by K.Baker posted on
Death of the family farm
Comment by Jeremy Bolas posted on
Trying to divide opinion by setting one side against another is an old political ruse, and that is all this is. The Chancellor should look again at the number of small farms adversely affected and raise the pre tax allowance.
Comment by Joe posted on
Take a fair person to stand up and admit a mistake, clearly you are not willing to admit you have the sums wrong here.
Comment by Peter Hunt posted on
I just don't buy the so-called £22m black hole. It cannot be true that this only came to the notice of this government after the election. Any shadow chancellor worth their salt should have made it their business to find the full extent of the Conservative government's legacy. If I as an 83-year-old retired service engineer can find the information from government websites, so can they. The real problem that the government will not confront or mention, is the present and historic balance of payments deficit that has cost us £billions every year for at least a decade. We cannot spend more than we have coming in unless we borrow. Why can't they be honest about it?
Comment by John Hyde posted on
This policy on inheritance is going to destroy, agriculture and the community's around farms, as well as others in the area
Agriculture and other business brings employment in the Area and that will be destroyed.
Please reverse this terrible tax plan now.
Comment by Laura Catherine Davies posted on
No one understands the countryside only country people. Does anyone understand how many people depend on me.
Comment by Stephen Holt posted on
Utter Bunkum. Rachel has spun her own CV and is now spinning these figures. DEFRA s own figures show average farm size to be 220 acs. Add in a farmhouse, a workers cottage, stock,machinery and working capital it is easy to reach £4m. There are lies being peddled that anything below £3m will be tax free but the Treasury has confirmed that the £1 m agricultural exemption is not transferable between spouses. This means estates above £2m will have to pay. At least have the guts to tell the truth.
Comment by john hawkins posted on
When will you let us spend that 5 Billion then?
If BPS is gone and SFI is still restricted by the RPA and DEFRA to the few and doesnt even cover costs.. Stop Spinning and Start delivering please?
Comment by Nick Robin posted on
Try using the real data not blase figures and you would realise that a true figure would be £8m not £1m.
Comment by Maureen Hutchison posted on
I am totally in favour of Labour’s Inheritance Tax levy on bigger farms.Shame ordinary taxpayers have to pay 40% inheritance tax on estates over £1,000,0000 when many houses are valued at more than this.Why should farmers be subsidised? It’s a business which exploits animals and the environment
Comment by Iain posted on
If people paid the correct cost for food and agricultural businesses made a comparable return on capital to other industries then this wouldn't be a problem.
Government cannot have it both ways - cheap food for the masses and a slice of the agricultural business upon the proprietors death.
Perhaps government should create a fairer formula here so that financial hardship can be avoided?
Comment by John w. Baxter posted on
I find it incredible that based on HMRC tax receipts and DEFRA data pertaining to agriculture and the monies paid out to holdings by DEFRA you cannot define how many holdings would be affected by a policy designed to raise revenue.
I could only suggest you get your act together, show us the facts and have us feel some sense of credibility that we are being led and guided by people who have got the true facts and know their business. Do your homework!…….you know how much estates are worth, or has the skulduggery of the U.K. tax system become so complex that even the creators of the system and the manipulators of the system have lost direction?…….give us all something to believe in!.
Comment by Barrie S. Haigh posted on
The new government has stirred a sleeping Lion.
Farm net profits average 1%
Paying the 20% IHT over 10 years will change 1% net profit to a significant minus profit Figure.
Should Farmers wish to continue Farming they will be unable to do so.
Farmer"s power: 1 Refusal to take human sewage.
2 repossession of Farmers kit because they will be unable to continue payments.
3 Land will not be farmed as seed s will not be bought.
4- Gradual reduction in food production.
5 Increase in imports.