The government has seriously underestimated the damage its inheritance tax reforms will inflict on Britain’s small family farms. Far from targeting only wealthy landowners, the changes — due in April 2026 — will devastate hundreds of modest, working farms that have been in families for generations.
The numbers are stark. According to the Centre for the Analysis of Taxation (CenTax), 67% of farmer-owners will be hit by the changes compared to just 20% of non-farming landowners. Around 205 of those affected each year — nearly half — will be “small family farms” valued at less than £5 million. For some, the new 20% inheritance tax on agricultural assets over £1 million will mean bills so high that survival is impossible without selling off land. Once that land goes, the farm’s viability is gone too.
This isn’t about empire estates or absentee landlords. This is the food table of Britain at risk. These are the farms that stock our markets, sustain our rural economies, and pass down skills and stewardship from one generation to the next. To lose them in a politically mismanaged bid to plug a fiscal black hole is short-sighted in the extreme.
Institutional Deflection — and a Missed Opportunity
The government’s response has been the familiar entrenched institutional mindset: acknowledge “we’ll look into it,” then deflect into talking points about investment in sustainable food production and export costs to Europe. That misses the point entirely. A farm cannot benefit from export incentives if it has already been broken up to pay an unmanageable tax bill.
Smarter Fixes Are on the Table
Experts — including those who originally inspired the reform — have now put forward targeted alternatives. Options include:
- Minimum Share Rule: Remove tax relief for passive investors while extending full relief to £5 million for genuine working farms.
- Upper Limit on Relief: Cap relief at the first £10 million of any claim, while raising the full relief threshold to £2 million for family farms.
- Clawback Scheme: Apply full inheritance tax only if the successor sells within seven years of inheriting, protecting those who keep farming.
The National Farmers’ Union supports these proposals, rightly warning that most medium-sized farms cannot service the new tax bills from income alone — given average farm returns are less than 1% of asset value.
The Real Cost of Getting This Wrong
If the government presses ahead without change, the result will be fewer family farms, reduced domestic food security, and a rural economy hollowed out for the sake of a projected £520 million a year — a fraction of the nation’s tax take. The loss will be permanent; once farmland is sold off for non-agricultural use, it rarely returns to production.
Rachel Reeves still has a chance to fix this before the Finance Bill is set in stone. That means listening to the farming community, adopting the targeted solutions already on the table, and rejecting a one-size-fits-all policy that punishes the very people Britain relies on to keep food on our plates.
This isn’t just a numbers issue — it’s a question of whether we value the heritage, resilience, and contribution of family farms enough to protect them from political miscalculation.
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