Editorial: The major cut to the new Farm Tax is welcome but belated

​The Labour government has been forced into yet another climbdown, this time over the hated Farm Tax.

​The sudden decision to make farms applicable to inheritance tax caused uproar across the UK, particularly in largely rural areas such as Northern Ireland. Farming has been hard enough for many years, without this.

Sir Keir Starmer has given the agricultural world a festive gift, although it is very much a case of the prime minister now giveth, having first taketh away. The way the tax was introduced caused months of stress and upset to farmers across the land.

There always were legitimate points to be made about the manipulation of agricultural ownership by wealthy folk in order to exempt themselves from inheritance tax. But the number of people doing that was tiny, and the swingeing new inheritance tax plan threatened to bring relatively small landholders into the tax orbit. Given that many farmers are already operating on wafer thin margins it would have resulted in farms being sold – the last thing the country needs.

Now the government is planning a far more generous tax exemption of £2.5 million. And the new agricultural relief will operate per person, so that a couple who own a farm jointly will enjoy a £5m exemption. On top of which, there are existing inheritance tax exemptions of £325,000 per person and another £175,00 for anyone leaving a house to a direct descendant – potentially £500,000 per person exempt, or £1m per couple. This means that in theory a farming couple could leave £6 million to their heirs exempt from inheritance tax.

Now the great bulk of farmers have little risk of being liable for inheritance tax.

This is a good outcome, although the Ulster Farmers Union is calling for the tax to be scrapped entirely.

Months of anxiety would have been entirely avoidable anxiety if Labour had listened earlier.