The administration softens death duty proposal for family farms

Treasury intentions to impose a duty on passed-down agricultural land have been watered down, with the proposed threshold being raised from £1m to £2.5m.

This concession comes after months of campaigns by the farming community and concern from some Labour MPs.

Original Plan

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

In her first Budget in 2024, Chancellor Rachel Reeves stated she would be ending the exemption on farmland that had been in place since the 1980s.

The measure would have seen passed-down farmland worth over £1m subject to a levy at 20%, 50% of the standard inheritance tax rate, generating an estimated £520m annually by 2029.

Ministerial Comments

"We have paid close attention to family farms across the country and we are introducing modifications today to shield more everyday family farms."

"It's only right that wealthier landowners pay a greater share, while we back the agricultural enterprises that are the lifeblood of Britain's countryside."

Industry Reaction

The President of the National Farmers' Union praised the adjustment, saying it "removes many family farms from the threat of damaging tax."

The President of the Country Land and Business Association said: "The government should be commended for acknowledging the shortcomings in the initial plan and changing course."

He went on to say, "However, this revision only limits the damage - it doesn't remove it totally. Many family businesses will own enough expensive machinery and land to be valued above the limit, yet still operate on such narrow profit margins that this levy remains unaffordable."

Political Fallout

In the 14 months since the first announcement, there have been regular demonstrations by farmers close to Parliament.

Some Labour MPs in the countryside have also raised objections. At a recent legislative vote on the plan, a several backbenchers did not vote and one opposed the measure.

The opposition leader posted on social media: "This fight isn't over. Other family businesses are still affected by Labour's tax raid, and we will keep campaigning until the tax is lifted from them too."

A opposition party spokesperson stated: "It is utterly inexcusable that family farmers have been put through over a year of uncertainty and stress since the government first proposed these changes."

The Reform UK spokesperson said: "This last-minute U-turn - whilst better than nothing - does little to address the year of anxiety that farmers have faced... with British agriculture hanging by a thread, the government must go further and end this damaging agricultural levy."

New Terms

The government had contended that the change would help smaller farms while deterring large estates from buying farmland as a tax loophole.

However, it has now retreated from the first announcement lifting the threshold level to £2.5m.

Coupled with an allowance which allows farmers to pass on assets to their husbands or wives free of inheritance tax, this new government concession means a married pair could pass on up to £5m in eligible assets.