Farmers and industry leaders have voiced strong opposition to Chancellor Rachel Reeves’s plan to reduce inheritance tax relief for agricultural properties, warning that the move could hinder economic growth and threaten the farming sector’s stability.
Speaking at the National Farmers’ Union (NFU) conference on Tuesday, Rain Newton-Smith, Chief Executive of the Confederation of British Industry (CBI), described the policy change as a “£500 million raid” on the industry, leading to plummeting confidence within the sector. The revised policy, set to take effect in April, will increase the effective inheritance tax (IHT) rate on farm estates to 20%, ending a long-standing exemption under Agricultural Property Relief.
Newton-Smith emphasized the potential consequences for both farmers and the broader economy, noting that UK farmers produce 58% of the country’s food supply. “To ensure a resilient economy, we need a strong farming community,” she said. CBI research estimates that the reduction in tax relief could result in the loss of up to 125,900 jobs by 2030 and may ultimately cost the Treasury £1.26 billion in lost revenue.
NFU President Tom Bradshaw proposed an alternative approach: applying IHT only if farm assets are sold within seven years of the owner’s death. Bradshaw argued this measure would protect family-run farms from being forced to sell land or equipment to cover tax liabilities. However, he noted that the Treasury had rejected this proposal, prompting farmers to campaign against what they are calling a “family farm tax.”
As Environment Secretary Steve Reed prepares to address NFU members, pressure is mounting on Reeves to reconsider the tax policy. While Reeves has defended the change as necessary to increase government revenue, critics fear the long-term impact on food production and rural economies could outweigh any short-term fiscal gains.
Newton-Smith stressed the urgency of open dialogue between policymakers and the farming community. “Any plan for growth or industrial strategy will fail if we do not first back our foundational sectors,” she said, urging the government to revisit the tax reforms before they take effect.
