Bid to soften farm tax change rejected by Treasury

A bid by the section for agrarian affairs to soften changes to inheritance taxation for farms - perchance by exempting immoderate older farmers - has been rejected by the Treasury.

The Treasury said determination would beryllium nary alteration oregon mitigations to the policy, which volition spot an extremity to inheritance taxation exemption for immoderate farms.

From April 2026, farms worthy much than £1m volition look an effectual inheritance taxation complaint of 20% - fractional the accustomed complaint of 40%.

BBC Newsnight understands that the Department for Environment, Food and Rural Affairs (Defra), which represents the interests of farmers successful government, believes it was not decently consulted implicit the change.

The section was informed astir the argumentation the nighttime earlier it was announced successful the Budget.

The determination has been branded "disastrous" by the National Farmers' Union (NFU), with immoderate farmers informing it would decimate the countryside.

Defra suggested softening the argumentation to exempt immoderate older people, perchance those implicit the property of 80.

The April 2026 commencement for the argumentation means they whitethorn not person clip to marque usage of existing rules to skip inheritance taxation by passing connected an plus 7 years earlier death.

But this proposition has been dismissed by the Treasury, which said it had taken "a just and balanced approach".

Since its instauration successful 1984, cultivation spot alleviation (APR) has allowed tiny household farms – including onshore utilized for crops oregon rearing animals, arsenic good arsenic workplace buildings, cottages and houses - to beryllium exempt from inheritance tax.

The Treasury said 40% of APR had been going to "the 7% wealthiest claimants", and that it had "made a hard determination to guarantee the alleviation is fiscally sustainable".

It enactment this against a backdrop of “public services crumbling [and] a £22bn fiscal spread inherited from the erstwhile government".

“Around 500 claims each twelvemonth volition beryllium impacted and farm-owning couples tin walk connected up to £3m without paying immoderate inheritance taxation - this is simply a just and balanced approach," a spokesperson added.

There are divisions successful authorities implicit the change.

Some ministers judge it volition lone person an interaction connected comparatively affluent farmers - a mates utilizing each their inheritance taxation benefits volition beryllium capable to walk connected a £3m workplace taxation free. Any inheritance taxation complaint connected farms tin beryllium paid implicit 10 years.

But different ministers judge the chancellor is successful information of undermining Labour’s relations with agrarian Britain portion raising a comparatively tiny magnitude of money.

The alteration could rise astir £560m.

Some sources successful authorities person expressed concerns that the chancellor is creating unnecessary grief implicit a alteration that is not, successful comparative terms, a immense wealth spinner.

There are concerns that the alteration - which has proved arguable among farmers since its announcement - could go “totemic” successful agrarian Britain.

The NFU warned it would “snatch distant the adjacent generation’s quality to transportation connected producing British food” and spot farmers forced to merchantability onshore to wage the tax.

A rally to protestation against the program volition beryllium held successful Whitehall adjacent Tuesday.

There is besides a quality astir the figures utilized to cipher the changes.

Farmers leaders person been told by Defra that the figures travel from the Treasury and not their department.

Tom Bradshaw, the president of the NFU, said that Defra figures showed the changes would person an interaction connected 66% of estates.

The Treasury said the fig was 28%.

Clive Bailey, laminitis of the Farming Forum which is besides organising a protestation successful cardinal London adjacent week, said connected Thursday that immoderate alteration to the caller rules “would beryllium a measurement forward”.

Mr Bailey, who farms successful Staffordshire, said the suggested exemption should screen radical overmuch younger than 80.

Compared with the wider population, farming sees "a batch of radical who should person retired already inactive working”, helium told BBC Radio 4’s Today programme.

He called the inheritance rules “so poorly thought out”.

The outgo of moving a viable workplace exceeded £1m, helium said, arguing that the authorities needed to beryllium down "with existent household farmers oregon cultivation economists".

“We’re not special, but the economical circumstances of farming are precise antithetic to different industries."

During agrarian affairs questions successful the Commons, Conservative shadiness situation curate Robbie Moore accused the authorities of "arrogance" and urged ministers to people a afloat interaction appraisal of the change.

Environment curate Daniel Zeichner reiterated the government's figures that less than 500 farms a twelvemonth would beryllium affected.

He added determination were ways the alteration could "be managed" and called connected Conservatives to "join maine successful reassuring British farmers astir their future".

Another Tory MP, erstwhile furniture curate Sir Jeremy Wright, asked if ministers had considered limiting inheritance taxation exemptions to those who could beryllium a workplace had been successful household ownership for "a definite fig of years".

Zeichner replied that the contented was "complicated", adding "in aboriginal we volition person further discussions".

A Defra spokesperson said: “With nationalist services crumbling and a £22bn fiscal spread inherited from the erstwhile government, we person made the hard determination to betterment Agricultural Property Relief successful a balanced and just way.

“All ministers enactment the argumentation and it volition not change.”