Farmers Protest Against UK Inheritance Tax Changes
On November 19 2024, thousands of farmers descended upon London to protest against the proposed changes to inheritance tax, arguing that it would jeopardise their livelihoods and the future of farming. The new measures, set to come into effect in April 2026, will impose a 20% tax on inherited agricultural assets worth over £1 million. The main concern is that many farmers, despite owning valuable land and assets, are ‘asset rich but cash poor’, so they may be forced to sell off land or assets to pay the tax.
What are the new rules?
Farmers will pay 20% inheritance tax on any value above £1 million
There is no inheritance tax on property valued up to £325 000
If the farmer is married, their spouse can pass on another £1.325 million tax-free, increasing the total untaxed amount to £2.65 million
Ahead of the protest, nearly 2000 members of the National Farmers’ Union participated in a mass lobbying of MPs. President Tom Bradshaw described the changes as the ‘straw that broke the camel’s back’ and ‘stab in the back’ for farmers.
Who will be affected?
The government has claimed that only 500 out of the UK’s 210,000 farms will be affected. However, the NFU and the Country Land and Business Association have estimated that up to 70,000 farmers will have to pay tax. Defra’s data revealed that 66% of the UK’s farms are worth more than £1 million, and therefore will be subjected to tax.
In recent years, land prices in rural areas have surged, meaning even smaller family-owned farms could face heavy tax bills. Many agricultural businesses depend on long-term investments in property and equipment, leaving farmers without the liquid funds necessary to pay inheritance taxes. This may lead to forced sales of land or even closures, disrupting agricultural supply chains and local economies.
Gloucestershire livestock farmer David Barton estimated that his business is worth around £5 million, but says it is not that profitable for him and his family. He shared his concerns that his son, who will inherit the farm, may face a hefty £800,000 tax bill. Barton asserted that the budget has ‘ripped the heart out of [them].
How have political parties reacted?
Prime Minister Keir Starmer said he ‘gets’ farmers’ concerns but is ‘confident that the vast majority of farms will not be affected’. He attempted to reassure farmers, saying that Labour has pledged £5 billion over two years in farming and food sustainability. Steve Reed, the Environment Secretary, insisted that the tax is both ‘fair’ and ‘proportionate’.
The Conservative Party and Opposition leader, Kemi Badenoch, pledged to reverse the tax, describing it as a policy that ‘would destroy farming as we know it’.
The Liberal Democrats also spoke out in retaliation of the policy, criticising Labour’s ‘utter rubbish’ claim that only 500 of the UK’s wealthiest farmers’ estates would be affected each year.
Is the policy fair?
The fairness of the policy has become a central point of contention. Proponents claim the tax changes ensure a more equitable distribution of wealth, pointing out that agricultural estates have long benefited from exemptions. However, critics argue that taxing farms based on their land value disproportionately burdens farmers.
In comparison to other countries, the UK’s approach appears misaligned. For example, eight EU countries do not impose inheritance, estate or gift taxes on their citizens, including Estonia and Austria. In the US, generous exemptions allow estates worth up to $13.61 million, a threshold that rises to $27.22 million for married couples. This generous exemption means that many estates will not be taxed; indeed, in 2020, less than 1% of farm estates owed estate taxes. These examples demonstrate alternative models that balance fairness with preserving agricultural heritage, models the UK could potentially adopt.
Long-term implications
The proposed tax changes have sparked debate. On one hand, closing tax loopholes for agricultural estates can prevent wealthy individuals from exploiting agricultural tax breaks for tax avoidance. On the other hand, policies that disregard the unique challenges of farming risk undermining the communities they target.
The protest serves as a reminder of the delicate balance required when it comes to political and economic reforms. The government must reconsider whether its approach is consistent with global practices and genuinely equitable. Farmland, a critical resource for national food security, should arguably not be treated the same as luxury estates. If farmers are forced to sell land to meet tax obligations, what will the long-term consequences be for the UK’s agricultural landscape?
Without a reassessment, the inheritance tax changes risk becoming another chapter in the long history of policies that fail to account for rural realities. The farming community is demanding a rethink of the proposed changes - and perhaps they deserve one.
By Bhavana Sathyamurthi
