Inheritance tax change sparks MPs’ alarm over impact on family farms
Plans to end decades-old inheritance tax relief on farmland have prompted a vocal backlash from MPs concerned about Britain’s future agricultural landscape. In a detailed report, the Environment, Food and Rural Affairs (EFRA) Committee argues that removing the Agricultural Property Relief (APR) carve-out without proper consultation could inflict “unintended consequences” on some of the country’s most vulnerable farmers.
Why APR mattered to generations of farmers
Since its introduction, APR has allowed landowners to pass down family farms tax-free, safeguarding estates that often span hundreds of years in a single family’s hands. By exempting qualifying farmland from the 40% inheritance tax (IHT), APR ensured that heirs could maintain operations without having to sell off parcels merely to meet a tax bill.
Under the government’s proposals, scheduled to take effect in April next year, the full relief will be capped at the first £1 million of farmland value. Any additional acreage transferred on death will attract a 20% levy, forcing many estates to find significant cash to settle their IHT liability.
EFRA Committee sounds ‘disregard for the vulnerable’ warning
Chaired by Liberal Democrat MP Alistair Carmichael, the EFRA Committee’s report paints a stark picture of rushed policymaking. Carmichael told City A.M.:
- “If these proposals go ahead as currently framed, they will pose a serious threat to the future of farming in the United Kingdom.”
- “The government could have done a consultation or impact assessment; they haven’t, and consequently, no one can have confidence in the case they have put forward.”
The committee highlights a “considerable risk” that the new rules will compel family farmers to sell historic land, undermining rural communities and food security in the process.
Calls for a one-year pause and proper impact assessment
To avoid irreversible damage, MPs recommend delaying implementation by at least twelve months. This window would allow affected farmers to:
- Reorganise their financial and estate planning.
- Contribute to a formal public consultation on the measure.
- Enable ministers to commission a robust impact assessment covering economic, social and environmental effects.
Carmichael urged ministers to “do it as it ought to have been done properly in the first place” and to focus on tackling wealthy landowners who abuse relief schemes, rather than penalising generational family farms.
Government defends reforms as vital and balanced
A DEFRA spokesman insisted the changes are essential to “fix the public services we all rely on,” pointing out that:
- Three-quarters of estates will continue to pay no inheritance tax at all.
- The remaining quarter will pay no more than 20% on amounts above £1 million—half the rate most people face.
- Payments can be spread over ten years, interest-free, to protect cash-strapped heirs.
Downing Street argues that wealthy investors have been using farm purchases as a tax-avoidance tactic, justifying a fairer approach to APR and similar Business Property Relief (BPR) for family firms.
Political firestorm and industry opposition
Since the Budget announcement in October, farmers’ protests have erupted across the country, with tractors gathering in Westminster and town halls. The National Farmers’ Union has accused the Treasury of hugely underestimating the number of estates affected.
On the opposition benches, shadow environment secretary Victoria Atkins lambasted the policy as “Labour’s cruel Family Farm Tax,” warning it threatens food security and rural communities. While Labour itself has yet to fully commit to a reversal, both Conservative and Lib Dem backbenchers have called for urgent reassessment.
What happens next?
With just months to go before the tax changes are due to kick in, the government faces mounting pressure to revise its approach. Should ministers heed the EFRA Committee’s plea, a one-year grace period would be announced ahead of the Budget, accompanied by a formal consultation and an independent impact study.
Failing that, family farms across the UK risk being broken up or forced into costly asset sales, potentially reshaping the agricultural sector in ways that no one can yet fully predict. The next few weeks will be critical as MPs, industry bodies and farming families make their voices heard in Westminster’s corridors of power.