I was lucky to have secondary school pupil Leo Braddish come visit my Westminster office from Lincolnshire this past week.
He wrote a paper for me on the damaging impact that the family farm tax is having on agriculture, reproduced below.
Family farms in the UK were previously exempt from Inheritance Tax on agricultural and business assets due to Agricultural Property Relief, with no cap on the value. This allowed farms to be passed down through generations without the beneficiaries having to sell assets to pay large tax. In the autumn budget 2024 the Labour government announced reforms to agricultural property relief from inheritance tax. From 6 April 2026, the full 100% relief from inheritance tax will be restricted to the first £1 million of combined agricultural and business property. Above this amount, landowners will access 50% relief from inheritance tax and will pay inheritance tax at a reduced effective rate up to 20%, rather than the standard 40%. This tax can be paid in instalments over 10 years interest free, rather than immediately, as with other types of inheritance tax.
The negative effect of the reforms on the Farming and Rural community is worrying. When addressing the Peers in the House of Lords, in an inquiry to the Inheritance Tax reforms, NFU President Tom Bradshaw told the room that the family farm tax posed an immediate and widespread threat to family farms. Tom Bradshaw explained that the NFU’s earlier assessment found that most farms lack the cash to pay large inheritance tax bills and would need to sell land or assets. Furthermore, The Government have suggested that only 27% of Family Farms will be affected, however, NFU research finds that rather 75% of commercial family farms will be above the £1m threshold. Similarly, The Central Association of Agricultural Valuers has also reported that up to 75,000 individual owners of farming businesses could expect to be affected over the coming generation.
The reforms will also have a negative impact on investment and productivity on the farms which will ultimately have a negative effect on the countries food industry. Increased expected transfer costs lower the incentive to invest in assets. Faced with the prospect of future tax liabilities on land value, Family Farms may delay or reduce capital investments, such as machinery, buildings etc, that have long payback periods. Thus, Farms will become less efficient, and lack of investment will lower their productivity. This will effect the countries food industry as according to the Department for Environment, Food & Rural Affairs, the UK currently produces about 60% of its domestic food consumption by economic value, part of which is exported. With the reforms and family farms becoming less efficient, to decrease this number would be extremely damaging to Britain’s economy and to its food productivity.
Furthermore, this is not merely an issue economically, rather, family farms are an integral part of British culture, identity and community. When intergenerational transfers become more difficult, older generations will be unable to retire and the younger generations may be deterred from farming. Therefore, if Family Farms start to disappear, the UK agricultural land will be bought by large businesses for other uses, such as the industrialisation of Britain’s beautiful countryside, for solar farms, windfarms etc. Moreover, on a humanitarian level, the loss of these farms from the families, will have a damaging effect on them. They will lose their livelihoods and homes, skills and assets which have been passed on generation to generation which could because of this incompetent reform could be gone.
Besides, when these family farms split, there is no guarantee the land will be sold. As already mentioned, the reform risks the prospect that the land will be sold to big businesses to be used for industrial and green energy purposes, not necessarily farming, however there is also the possibility that this land will not be sold. Thus, with land either being sold to big businesses or not at all, the production of agricultural food will diminish risking food prices increases. Even before coming into force, the Family Farm Tax is sadly already causing some Farms to close, impacting inflation and hitting our food prices. A record 6,365 agriculture, forestry, and fishing businesses closed in the past year, according to the Office for National Statistics.
Lastly the reforms will have damaging effects on the nation’s employment. With more and more Farms closing or cutting costs the amount of people who work in the agricultural industry will decrease significantly. Therefore, this reform will have a substantially negative impact on the county’s economy with an increase in people out of work. The total number of people working on agricultural holdings in England was 279,000 on 1 June 2025. This is a decrease of 1.9% since 2024 which demonstrates clearly the decrease in employment in agriculture, a statistic which will grow and become a significant issue in the future on this country.
To conclude, the family farm tax is a damaging reform to inheritance tax introduced by the Labour government. The reform, is not only one which will shatter the lives of many farmers and their families farm, not only destroy our countries beautiful countryside, but will also have worrying effects on employment, productivity, inflation the investments made by these Farmers.
