Farmers across the UK are raising their voices against new inheritance tax (IHT) rules announced in the latest Budget. The changes, set to take effect in April 2026, threaten to impose significant financial burdens on family-run farms, sparking fears for the future of the agricultural sector.
What Are the Changes?
Under the current system, agricultural properties benefit from 100% relief on inheritance tax, allowing family farms to pass seamlessly to the next generation. The new rules introduce a cap: only the first £1 million of agricultural assets will be fully exempt. Any value above this threshold will be taxed at 20%, half the standard inheritance tax rate.
This change, while seemingly modest, could have serious consequences for farming families. With farmland values often exceeding £10,000 per acre, even small- to medium-sized farms are likely to breach the cap. For example, a farm valued at £2 million could face a tax bill of £200,000, a cost that many families may struggle to meet without selling assets or land.
Who Will Be Affected?
Government estimates suggest around 500 farms per year will face these new tax liabilities. However, industry groups warn the impact could be far wider. The Country Land and Business Association estimates up to 70,000 farms could be affected over time, particularly in areas where high land values push even modest farms above the threshold.
Critics argue that this move disproportionately targets family farms, many of which are “asset-rich but cash-poor.” Farmers often reinvest income into land, equipment, and sustainability projects, leaving little liquidity to cover sudden tax bills. Without sufficient planning, families may be forced to sell vital parts of their operations, threatening livelihoods and food production.
Why This Matters
Farming communities play a critical role in the UK’s economy and food security. These changes not only jeopardize the viability of family farms but could also lead to significant upheavals in rural areas. Land sales driven by inheritance tax burdens could see agricultural property snapped up by larger corporations or non-agricultural investors, further eroding the fabric of rural communities.
A Call to Action
Family Business United, a champion of family enterprises, has launched a campaign to reverse these changes. They argue that the policy undermines the principles of fairness and sustainability in rural Britain. By signing their petition, you can help ensure that farming families retain the ability to pass on their legacy without financial ruin.
This is a crucial moment for UK farmers. The government must balance tax reform with the need to protect the backbone of rural communities. With your support, we can push for policies that respect the importance of family farms while ensuring fairness for all.
