Inheritance tax plan for farms watered down after backlash

Government proposals to tax inherited farmland have been watered down, with the planned threshold increasing from £1m to £2.5m.

The climbdown follows months of protests by farmers and concern from some Labour backbenchers.

At last year's Budget, ministers said they would start imposing a 20% tax on inherited agricultural assets worth more than £1m from April 2026.

Environment Secretary Emma Reynolds said: "We have listened closely to farmers across the country and we are making changes today to protect more ordinary family farms."

"It's only right that larger estates contribute more, while we back the farms and trading businesses that are the backbone of Britain's rural communities."

Head of the National Farmers' Union Tom Bradshaw welcomed the change, telling BBC Radio 5 Live it "takes out many family farms from the eye of pernicious storm".

Gavin Lane, President of the Country Land and Business Association, said: "The government deserves credit for recognising the flaws in the original policy and changing course.

"However, this announcement only limits the damage - it doesn't eradicate it entirely.

"Many family businesses will own enough expensive machinery and land to be valued above the threshold, yet still operate on such narrow profit margins that this tax burden remains unaffordable."

In the 14 months since the initial proposal was announced, there have been regular protests by farmers outside Parliament.

Some Labour MPs in rural areas have also expressed concern. At a recent parliamentary vote on the plan, a dozen backbenchers abstained and one, Markus Campbell-Savours, voted against.

Campbell-Savours was subsequently suspended for voting against the government, meaning he now sits as an independent MP.

Conservative leader Kemi Badenoch said in a post on social media: "This fight isn't finished.

"Other family businesses are still affected by Labour's tax raid, and we will keep pushing until the tax is lifted from them too."

Liberal Democrat spokesperson Tim Farron MP said: "It is utterly inexcusable that family farmers have been put through over a year of uncertainty and anguish since the government first announced these changes.

"We demand that the government scraps this unfair tax in full and if they refuse to, Liberal Democrats will submit amendments in the new year to bring it down."