Major climbdown on inheritance tax raid on farmers as Starmer caves in after months of pressure
Keir Starmer bowed to months of pressure from farmers today as Labor backed down on plans to introduce an inheritance tax on farmers.
The statement comes amid accusations that the Labor government has “declared war on the countryside” following the introduction of new animal welfare legislation in the last 24 hours that will further restrict farming practices and ban track hunting.
The announcement by Chancellor Rachel Reeves last year that farmers would be charged 20 per cent on agricultural assets worth more than £1m from April 2026 has triggered a storm of anger amid fears family-run farms will be worst hit.
But on Tuesday, after a year of protests, Labor said it was changing the plan by increasing the threshold from £1 million to £2.5 million, eliminating most farms having to pay.
The government said this, in addition to existing allowances, will allow spouses or civil partners to transfer up to £5 million of qualifying agricultural or business assets between them before paying inheritance tax.
Environment Secretary Emma Reynolds said: “Farmers are at the heart of our food security and environmental management and I am determined to work with them to ensure a profitable future for British farming.
“We listened closely to farmers across the country, and today we’re making changes to protect more ordinary family farms.
“We are increasing the individual threshold from £1 million to £2.5 million, which means couples with estates worth up to £5 million will no longer pay inheritance tax on their estate.
“It is right that larger estates contribute more as we support the farms and commercial businesses that form the backbone of Britain’s rural communities.”
But campaign group No Farmers, No Food warned that this drop was not enough.
They said: “Great news for family farmers. The Labor government has finally scrapped inheritance tax on family farms. They’ve announced the threshold has increased to £2.5 million. That’s still not enough but it’s still a huge victory for everyone who has campaigned relentlessly on this issue.”
National Farmers Union (NFU) chief executive Tom Bradshaw said: “After months of NFU campaigning, the government today announced changes to the inheritance tax threshold for family farms. These changes mark a major victory for British farmers.”
Mo Metcalf-fisher, director of external affairs at the Countryside Alliance, said: “The government has finally addressed some of the terrible injustice of its original proposal for an inheritance tax on agricultural property, but it has caused months of unnecessary pain and anxiety.
“Time will tell whether it can learn the key lesson from this policy fiasco, namely that it needs to work with the rural community rather than legislate against it. The government has a long way to go to rebuild trust.”
Anger over the so-called Tractor Duty or Family Farm Tax has seen regular protests in London, with tractors descending on Whitehall.
The change to inheritance tax was seen as a “breach of trust” after Sir Keir reached out to the farming community ahead of the election, with farming groups warning that despite today’s drop Labor “will be hard to win back”.
The issue was at the forefront of responses to former NFU president Baroness Minette Batters’ recent review of the government’s review of farming incomes and profitability, which was published last week after two delays.
Even tax expert Dan Neidle, the architect of the proposal to introduce inheritance tax on farms, warned that the initial £1 million threshold was too low and should be closer to £20 million.
Conservative Shadow Environment Secretary Victoria Atkins described the escalation as “too little, too late”.
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Liberal Democrat rural affairs spokesman Tim Farron welcomed the news but added: “It is absolutely inexcusable that family farmers have faced uncertainty and suffering for more than a year since the government first announced these changes.
“This is about justice and security – if we undermine British agriculture we also undermine our ability to provide the food we need to keep us safe in an uncertain world.
“Yet many family farms will find themselves financially crippled and barely making minimum wage.”
