Government to raise inheritance tax relief threshold for farmers after months of protests

The Government has announced it will raise the inheritance tax relief threshold for farmers from £1 million to £2.5 million.

Ministers have watered down plans for an inheritance tax increase for farmers following months of protests.

The Government said this would allow spouses or civil partners to pass on up to £5 million in qualifying agricultural or business assets between them before paying inheritance tax, on top of existing allowances.

Environment Secretary Emma Reynolds said: ”Farmers are at the heart of our food security and environmental stewardship, and I am determined to work with them to secure a profitable future for British farming.

“We have listened closely to farmers across the country and we are making changes today to protect more ordinary family farms.

“We are increasing the individual threshold from £1m to £2.5m which means couples with estates of up to £5m will now pay no inheritance tax on their estates.

“It’s only right that larger estates contribute more, while we back the farms and trading businesses that are the backbone of Britain’s rural communities.”

NFU president Tom Bradshaw said the announcement would be a “huge relief to many” and would “greatly” reduce the tax burden for many family farms.

He said: “Changes to Agriculture Property Relief (APR) and Business Property Relief (BPR) announced in last year’s budget came as a huge shock to the farming community. Until that moment, the best tax planning advice was to hold on to your farm until death and pass it on to the next generation who could continue to run a viable farming, food producing business.

“The original changes to APR and BPR, contained within the Finance Bill, resulted in a pernicious and cruel tax, trapping the most elderly and vulnerable people and their families in the eye of the storm. The NFU and its members have stood strong for what we believed in.

“I am thankful common sense has prevailed and government has listened.

“I have had two very constructive meetings with Prime Minister Sir Keir Starmer and dozens of conversations with Defra Secretary of State Emma Reynolds. She has played a key role underlining the human impact of this tax.

“These conversations have led to today’s changes which were so desperately needed.

“From the start, the Government said it was trying to protect the family farm and the change announced today brings this much closer to reality for many.”

Shadow foreign secretary Dame Priti Patel said farming families were living in “fear and distress”, and Labour “still fails to understand the importance” of rural communities.

“Farming families are living in fear and distress, business and lives have been lost and Labour still fails to understand the importance of Britain’s farmers and our rural communities,” she said.

“Labour persecute families who want to work hard to get on in life.”

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