In a significant policy reversal just before Christmas, Prime Minister Sir Keir Starmer's government has announced a major concession on inheritance tax for the farming community. The move triples the tax relief threshold for family farms, marking a dramatic climbdown from proposals set out in Chancellor Rachel Reeves's budget last year.
A Major Concession After Fierce Protests
The core of the announcement sees the individual threshold for Agricultural Property Relief (APR) and Business Property Relief (BPR) increase from £1 million to £2.5 million. This means that couples with combined agricultural estates valued at up to £5 million will now pay no inheritance tax when passing on their farm to the next generation. Only larger estates exceeding this new limit will be liable.
Environment Secretary Emma Reynolds confirmed the change, stating the government had "listened closely to farmers across the country". She emphasised the aim was to "protect more ordinary family farms" while ensuring larger estates contribute more.
NFU Campaign Forces Government to Listen
The U-turn follows a relentless, high-profile campaign led by the National Farmers' Union (NFU), which included tractor blockades in Whitehall and Westminster. NFU President Tom Bradshaw revealed the shift came after he held two "very constructive meetings" with the Prime Minister himself.
Mr Bradshaw said the original budget changes had come as a "huge shock" and created a "pernicious and cruel tax" that trapped elderly farmers. He welcomed Tuesday's announcement as a huge relief that would greatly reduce the tax burden, thanking the government for allowing "common sense" to prevail.
Political Fallout and Calls to Go Further
The policy reversal has ignited a political row. Conservative leader Kemi Badenoch claimed it as a "huge U-turn" and a victory for her party's campaign against what she termed Labour's "cruel, immoral" family farm tax. She argued the tax would have damaged Britain's food security.
However, the climbdown also exposed tensions within Labour, coming after a mini-rebellion in early December where around 30 Labour MPs from rural areas abstained on a vote related to the tax. One MP, Markus Campbell-Savours, voted against and had the party whip withdrawn.
Opposition parties argued the government has not gone far enough. Liberal Democrat spokesperson Tim Farron urged ministers to scrap the "unfair tax in full", while Reform UK's Richard Tice called the move a "cynical climbdown" after a year of anxiety for the farming sector and demanded full abolition.
