Burnham-On-Sea’s MP has welcomed a government decision to raise the inheritance tax threshold for farms following months of pressure from campaigners and rural MPs.
Ministers have confirmed that the threshold for taxing inherited agricultural land will rise from £1 million to £2.5 million when the new system comes into force in April.
The announcement follows widespread concern from farmers and representatives across rural constituencies, including Burnham’s Ashley Fox and Wells MP Tessa Munt.
Plans to tax inherited agricultural assets worth more than £1m at a rate of 20% were announced in Rachel Reeves’s first budget last year.
The change reversed tax relief that has existed in its modern form since the 1980s. Above the £1m threshold, inherited farmland was to have been taxed at 20%, half the standard inheritance tax rate, in a move initially estimated to raise £520m annually by 2029.
The announcement was labelled a “family farm tax” by critics and triggered protests around the UK, with farmers arguing it would prevent many of them from passing on their farms to their children. Farmers protested outside parliament.
Burnham-On-Sea MP Ashley Fox welcomed the news and told Burnham-On-Sea.com: “I welcome the announcement by the government to raise the threshold for Agricultural Property Relief and Business Property Relief. It is another Labour U-turn, and one that should not have taken this long to reach. Raising the threshold from £1m to £2.5 million is a step in the right direction, but it should never have required this level of distress to get here.”
“From the outset, Conservatives warned that this tax risked doing real damage to family farms, not just financially, but personally. Farmers, growers, and their families have lived for months under great uncertainty, and for some the pressure has been unbearable. Labour cannot ignore the fact that this policy has had severe human consequences, and caused immense distress to many people.”
“This change is the result of sustained campaigning by Conservatives, farmers, the NFU, and voices from across Parliament who refused to stay silent. I pay tribute to the farmers who spoke out and to those who backed them.”
And Wells MP Tessa Munt, who represents rural areas just outside Burnham such as Brent Knoll, Wedmore and Mark, expressed her relief that the threshold for the farming inheritance tax will be raised from £1m to £2.5m.
She told Burnham-On-Sea.com: “This tax was potentially devastating for family farms across the country. As MP for Wells and Mendip Hills, I was proud to protest it alongside farmers from my ‘patch’.”
“My Lib Dem colleagues and I were the first to call out and oppose this bonkers tax in last year’s budget. Since then, and alongside many others from the farming community, we have not stopped campaigning against it. I will continue to do all I can, alongside my colleagues, to demand that the government scraps it altogether.”
In a statement announcing the U-turn, the Department for Environment, Food and Rural Affairs (Defra) said ministers had “listened to concerns of the farming community and businesses about the reforms”.
Raising the threshold will mean fewer farms will be taxed. According to the government, the number of estates affected next year will be 185, down from 375. The change means married couples with estates of up to £5m will now pay no inheritance tax on them, as they can combine two £2.5m allowances.
The climbdown will cost the exchequer £130m, meaning the changes are still expected to raise nearly £300m a year.
The environment secretary, Emma Reynolds, said: “We have listened closely to farmers across the country and we are making changes today to protect more ordinary family farms. It’s only right that larger estates contribute more, while we back the farms and trading businesses that are the backbone of Britain’s rural communities.”
The National Farmers’ Union president, Tom Bradshaw, hailed the announcement as a “huge relief to many” that would greatly reduce the tax burden for many family farms.
“I am thankful common sense has prevailed and government has listened. I have had two very constructive meetings with prime minister Sir Keir Starmer and dozens of conversations with Defra secretary of state Emma Reynolds. She has played a key role underlining the human impact of this tax.”
“These conversations have led to today’s changes which were so desperately needed. From the start, the government said it was trying to protect the family farm and the change announced today brings this much closer to reality for many.”
