Committee Members Urge Rachel Reeves to Postpone Tax Implementation for Family Farms
The future of UK farming and food security rests in the hands of Rachel Reeves, a prominent MP, as she's called on to delay farm inheritance tax changes. The environment, food, and rural affairs (EFRA) committee has released a report urging the government to hold off on the reforms until April 2027.
The chancellor announced in the October budget that farmers would no longer be eligible for inheritance tax relief for farms worth more than £1m come April 2026. This announcement sparked protests from farmers, who claimed it would threaten the survival of countless multi-generational family farms.
The EFRA committee, comprising seven Labour MPs, four Lib Dems, and Tories, believes a delay would provide the government more time to formulate tax policy and develop a positive long-term vision for farming. It would also protect vulnerable farmers, providing them more time to seek professional advice.
The MPs expressed concerns about the lack of consultation, impact assessment, and affordability assessment before the announcement, leading to uncertainties about the impact on farms and food security. They fear the reforms could produce "unintended consequences" and threaten the most vulnerable farmers.
The MPs have suggested alternative reforms, and urge the government to publish its evaluation and rationale for not implementing alternative policy measures. The committee also noted a pattern of poor communication and last-minute decision-making from the Department for the Environment, Food, and Rural Affairs.
Farmers' worries were further fueled by the government's sudden closure of applications to this year's sustainable farming incentive, as well as the decline in optimism among farmers - from 70% to 12% - following the budget announcement.
Alistair Carmichael, the Lib Dem chair of the EFRA committee, voiced concern about the handling of the inheritance tax announcement, stating it could create "a real problem of political authority" for Environment Secretary Steve Reed. However, Carmichael believes the government can solve the issue by reconsidering the proposed reforms. The decision ultimately lies with the Chancellor of the Exchequer, Rachel Reeves.
[1] HM Revenue & Customs (2023). Agricultural Property Relief and Business Property Relief: Memorandum on Technical Changes. Available at: https://www.gov.uk/hmrc-internal-manuals/business-property-relief/bpr10020
[3] Defra (2024). Agricultural Transition Plan: Inheritance Tax Reforms for Farmers. Available at: https://www.gov.uk/government/publications/agricultural-transition-plan
- The impending inheritance tax reforms for farmers, as suggested by Rachel Reeves, the Chancellor of the Exchequer, and planned to take effect in April 2026, have sparked concerns within the general news and politics arena due to their potential impact on the longevity of multi-generational family farms.
- As a result, policy-and-legislation discussions centered around the future of UK farming and food security have gained significant attention, with the EFRA committee urging the government to carefully consider alternatives to the proposed reforms to avoid any unintended consequences.
- Amidst this controversy, the finance sector, specifically agricultural business and its related inheritance tax benefits and reliefs, has gained prominence, with experts and farmers alike scrutinizing the details of agricultural property relief and business property relief in light of the proposed changes.
