Inheritance tax changes for farmers welcomed by Cornwall's Labour MPs
All four Labour MPs from Cornwall supported the push for these changes
Changes to inheritance tax rules for farmers have been welcomed by Cornwall's Labour MPs, following a campaign alongside national rural Labour colleagues.
The Government announced today (23/12) that it will increase the allowance for the 100% rate of relief on inheritance tax linked to agricultural and business properties.
The new limit for Agricultural Property Relief and Business Property Relief has been raised to £2.5 million, with a 50% relief rate thereafter. For couples combining their allowances, this means they can pass on up to £5 million of agricultural or business assets, alongside other existing gross estates tax allowances.
According to government estimates, 85% of estates eligible to claim agricultural and business property relief in 2026-27 will not pay more inheritance tax under the new rules. Around 185 estates claiming relief may face additional inheritance tax costs during the same period.
All four Labour MPs from Cornwall supported the push for these changes, working closely with local farmers, the Labour Rural Research Group, industry specialists, and government departments.
Anna Gelderd, MP for South East Cornwall, said the updated provisions would provide “much needed certainty” for farming families and help protect family-run farms from undue financial pressures.
Noah Law, MP for St Austell and Newquay, expressed delight for local farmers, saying the reforms could safeguard smaller farms and shift focus away from larger operations.
“Constructive engagement with the Government and a willingness to stick your neck out can pay off,” Law said.
Perran Moon, MP for Camborne, Redruth and Hayle, said months of feedback from Cornish farmers helped fuel the campaign.
Moon noted the reform would offer “Christmas relief” to farming communities affected by inheritance tax concerns.
Jayne Kirkham, MP for Truro and Falmouth, added that elderly farmers in her area would now feel “protected,” especially when leveraging spousal allowances to maximise the adjusted threshold.
The MPs hailed the changes as a win for farmers and a demonstration of collaborative policymaking on an issue crucial to Cornwall’s agricultural sector.
The Government's announcement
The Government will raise the inheritance tax relief threshold for farmers from £1 million to £2.5 million in a climbdown following months of protest.
The change to the reforms initially unveiled at Labour's first Budget last year comes after ministers "listened to concerns" of the farming community and businesses, according to the Department for Environment, Food and Rural Affairs (Defra).
Baroness Minette Batters, the former head of the National Farmers' Union (NFU) who led an independent review for the Government, warned that the proposals had led to farmers contemplating taking their own lives to avoid the tax changes.
The higher threshold, which will take effect in April, will 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, Defra said.
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 £1 million to £2.5 million which means couples with estates of up to £5 million 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."
The Liberal Democrats called for the Government to scrap the "unfair tax in full" as "many family farms will still find themselves financially crippled and barely making the minimum wage".