'Labour were dragged to this point kicking and screaming': Farmers inheritance tax climbdown as government raises threshold from £1m to £2.5m
Labour were dragged to a climbdown on inheritance tax ‘kicking and screaming’, a DUP MP has said.
Carla Lockhart’s words came as farmers scored a victory following a year of protests, after the government agreed to climbdown a put inheritance tax thresholds at £2.5m instead of £1m.
The lower figure, it was feared, would threaten family farms and, in turn, undermine UK food production.
Agricultural land has previously been exempt from inheritance taxes, but that will change in April 2026 under plans from Chancellor of the Exchequer Rachel Reeves.
The chancellor’s original idea, announced in autumn last year, would have seen all farmers who inherit land and assets worth over £1m pay 20% tax on their value; instead, the government announced today in a climbdown, it’ll be property over £2.5m in value.
The change comes after ministers “listened to concerns” of the farming community and businesses, a Westminster department said today, and should mean only a little more than half of the original number of farms will now have to pay inheritance tax.
But for Upper Bann MP Mrs Lockhart, the move wouldn’t have happened without a year of massive protests, including demonstrations on the streets of London that saw hard-pressed Ulster farmers heads to England to join compatriots from England, Scotland and Wales in opposing the tax threat.
“This is welcome news for family farms,” she said. “It represents a clear shift from a government that, until now, refused to listen to the very real concerns of farmers.
“Throughout 2025 farmers were left in an impossible position, forced to plan for the future under a £1m threshold that simply did not reflect the value of land or the reality of modern farming. I repeatedly challenged this policy in parliament and stood shoulder to shoulder with farmers who were fighting for fairness.
“It is no secret that the government was dragged to this point kicking and screaming. Even when heart-breaking stories were shared, including fears that some people felt so overwhelmed they would rather give up everything than face this tax, there was little sign of compassion from those in charge.
“That said, this announcement is an improvement and it must be welcomed, particularly on the eve of Christmas Eve. The detail will matter, and I will be closely examining how these changes affect farms that still sit above the new thresholds.
“Today should mark the beginning of a new direction. As we move into 2026, farmers deserve to feel valued, supported and recognised for the vital role they play in our economy, food security and rural life.”
The higher threshold, which will take effect in April, will allow spouses or civil partners to pass on up to £5m in qualifying agricultural or business assets between them before paying inheritance tax on top of existing allowances, Westminster has said.
A 50% relief will apply to qualifying assets above that level.
The number of estates facing higher inheritance tax will be reduced from around 2,000 under to original plans to up 1,100, hitting only the largest farms, according to the government.
Demonstrations against the original form of the tax included a parade of tractors from the home of the Balmoral Show to Banbridge in January, and a UK-wide ‘Pancake Day protest’ on the streets of London in March.