Farming organisations have expressed alarm after the chancellor Rachel Reeves said she would reform Agricultural Property Relief and Business Property Relief.
As part of the autumn budget, the chancellor of the exchequer said that from April 2026, the first £1m of combined business and agricultural assets will continue to attract no inheritance tax, but for assets over £1m, inheritance tax will apply with 50% relief, at an effective rate of 20%.
The Country Land & Business Association said the reform would “harm 70,000 farms across the UK. This is not protecting the family farm as the Chancellor promised, but puts the rural economy, our food security, and environmental recovery at risk.” Other measures announced as part of the budget are tax rises of £40 bn. National insurance contributions paid by employers will increase to 15% from April 2025, which Reeves said would raise £25bn a year.
The chancellor also announced an increase in capital gains tax and the introduction of VAT on private school fees from 2025. Minimum wages will also rise in April to £12.21.
Announcing the plans, Reeves said the choices made are the right ones for the country. “They will restore stability, protect working people, fix the NHS and rebuild Britain,” she said.
However, Britain’s farmers and growers are now lobbying their MPs to highlight the impact of the recent budget on their farms, with changes to Agricultural Property Relief (APR) and Business Property Relief (BPR) causing concern to many farming families. After decades of tightening margins, record inflation, extreme weather and increased production costs, many farmers and growers say they are unable to absorb any more cost burden and have warned that the changes announced in the budget could increase food costs to consumers, adding pressure to many still experiencing the cost-of-living crisis.
They are arguing that the changes announced in the budget demonstrate a fundamental lack of understanding of how the British farming sector is shaped and managed. The current plans to change APR and BPR need to be overturned and fast. They are rightly angry and concerned about their future and the future of their family farms, having been reassured by minsters in the lead up to the Budget that APR and BPR changes were not on the table.
The Treasury’s figures which claim this will only affect one in four British farms are misleading. The £1 million cap to APR shows how little this government understands the sector. Very few viable farms would be worth under £1m, but lots of smallholdings and houses with a few acres let for grazing might be. The asset value of genuine food-producing farms will be high, given the size they need to be to remain viable businesses. However, that’s the value of the asset, it doesn’t reflect its profitability which is often, and increasingly so, very low.
Clearly the government does not understand that family farms are not only small farms, and that just because a farm is an asset, it doesn’t mean those who work it are wealthy. Every penny the Chancellor saves from this will come directly from the next generation having to break up their family farm. It simply mustn’t happen.
MPs need to understand the consequences of these actions and plans are formulating for a mass lobby in the coming weeks. British farmers will ask their MPs to look them in the eye and tell them whether they support this.
