Since 1992, farmers have benefitted from 100% Agricultural Property Relief (APR), which means they don’t have to pay any Inheritance Tax (IHT) on their land or property when the farmer-owner dies. But in the autumn budget of 2024, the new Government proposed changing APR to 50% but with the first £1 million exempt.
A married farming couple can claim £1 million each. Where tax must be paid, farmers have 10 years interest-free to make the payment.
The Government’s hope is that the change will raise revenue and close a loophole whereby speculators can invest in agricultural land without paying IHT. The Government claims the impact will be minimal: “Almost three-quarters of estates claiming Agricultural Property Relief and the majority of estates claiming Business Property Relief in 2026 to 2027 are expected to be unaffected by these reforms.”
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What do farmers think of the tax change?
Bizza Walters paints a very different picture – one that chimes with many conversations I’ve had with farmers. “We’ve 500 acres and all these buildings, and it is probably worth £8 to £10 million on paper, but my father takes home less than the average living wage and he’s 62. He has no pension. Should something happen to him or my uncle, we don’t have money to pay the IHT and we’d have to end up selling some of the farm.”
Farmer and Riverford Organic founder Guy Singh-Watson, speaking on a panel about IHT at the Oxford Real Farming Conference in February, asked why farmers should be a special case – everyone else has to pay inheritance tax. “Cash should come from those who own the most,” he said. “Farmers have options, such as selling land.”
Singh-Watson’s fellow panellists, Sussex organic farmer Anita McNaught and agricultural consultant Jeremy Moody countered this by saying selling land would leave farmers with even less land to make money from – and any sold land might be taken out of farming altogether by the new owner.
Singh-Watson suggested farmers should instead focus their energy on “protesting about being screwed by supermarkets”.
What has DEFRA said?
In response to farmers’ protests, DEFRA told me: “Whilst the reforms reduce the IHT advantages available to owners of agricultural and business assets, those assets will still be taxed at a much lower effective rate than most other assets.
“The latest figures for 2021–22 showed that the top 7% (the largest 117 claims) accounted for 40% of the total value of Agricultural Property Relief. This cost the taxpayer £219 million. The top 2% of claims (37 claims) accounted for 22% of Agricultural Property Relief, costing £119 million.”
DEFRA insisted “This is a fair and balanced approach to help fix the public services we all rely on.”
Perhaps the biggest test is how nervous Labour’s relatively new intake of MPs become at this growing backlash from farmers and those in the conservation world, and whether they could push for change from within the parliamentary parliament. For now, though, battlelines continue to be drawn in rural England.
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Top image: farmers protest against the inheritance tax reforms on 4 March 2025. Credit: Getty
