'Britain cannot live by air-freighted mangetout': Chorus of alarm over farming tax bill continues to grow

TUV leader Jim Allister said food production would suffer as a result of this “extinction policy”, while the DUP’s Strangford MP Jim Shannon promised payback at the ballot box, telling the government: “When it comes to election time, the people who you have hurt will remember.”

The controversy emerged on Wednesday, budget day, when the chancellor Rachel Reeves announced that farms will now be subject to inheritance tax if a farmer dies and passes it on to his sons or daughters.

Inheritance tax is normally 40%.

At the moment there is none to pay when a farm changes hands.

But the plan is that, from April 2026, if a farm (that is, the land, buildings, equipment, and house) is valued at over £1m, then everything over that £1m will be subject to inheritance tax at a rate of 20% (not the normal 40%).

In other words, if a farm is judged to be worth £1.5m, then it will have to pay a 20% tax on £500,000, payable over the following 10 years.

However, a number of people have said that this £1m exemption is virtually useless, because almost all farms will be valued at £1m-plus.

They also say that, in order to pay the tax bill, a farming family (whose wealth is all tied up in the physical farm) would have to sell off bits of their land.

Jim Allister said: “The Labour government proved what I suspected: it has no feeling or empathy with farmers. Else, it would not have dealt such a brutal blow to the future of family farming through its inheritance tax extinction policy.

“Farmers are asset rich because of their land, but often cash poor, with it being a struggle to meet the constant monthly bills from fluctuating income.

"The fact they own 50 or 100 acres isn’t something they can draw on for day-to-day needs. Yet, retaining that 50 or 100 acres for farming into the future is key to the generational survival of the farm.

“Hence, the reason and logic for the historic agricultural exemption from inheritance tax.

“Now, alas, this Government is set to raid farming assets by a whacking on inheritance tax upon the death of the current farmer. With limited cash reserves, most family farms, when that point comes, will have no alternative but to sell off land and thereby diminish the viability and productivity of the farm.

"Food production and security will suffer knock-on effects.”

Speaking in the Commons, Mr Shannon said: “The measure has been universally condemned by all the farmers I have spoken to, and I live in a farming community.

"The NFU, UFU and others are up in arms about this inheritance tax…

"I say to those on the government benches: guys, you have got it wrong, and this time you will be condemned. When it comes to election time, the people who you have hurt will remember.”

Conservative MP John Cooper said: “I can tell you in Dumfries and Galloway [his constituency], the howls of concern are real.

“We really need to discuss this, Britain cannot live by air-freighted mangetout alone.

"This budget imperils food security in this country, and we must have action on that. It’s incredible that the Defra Secretary (Steve Reed) seems so uncaring on this.”

Hilary Benn, Labour’s Northern Ireland Secretary, said the measure would only affect a “very small number” of farming estates.

“Secondly, even above £1 million, there would be a reduced rate of inheritance tax,” he said.

“Instead of the normal 40% it would be reduced by 50% so it would be at 20% and people would have 10 years to pay it off. That’s really important to remember that.

“Thirdly, of course, spouses can pass their assets between each other if one of the partners dies, without any inheritance tax being paid at all.

“And the last point I would make, if you want to go back in history, prior to 1992 the inheritance tax regime for farms was less generous – not a lot of people remember this – but was less generous than the new system that will apply as a result of what was announced in the budget.”