Farming leaders met with James Murray MP, Exchequer Secretary to the Treasury, and Farming Minister, Daniel Zeichner, yesterday to seek solutions to the government’s inheritance tax proposals.
The organisations presented a ‘clawback’ proposal as a way of mitigating some of the consequences and anomalies of the policy announced in the autumn budget.
However, farming leaders – including the NFU (National Farmers Union), TFA (Tenant Farmers Association), CLA (Country Land and Business Association) and CAAV (Central Association of Agricultural Valuers) said afterwards that they believed the government had no intention of compromising.
Speaking after the meeting, NFU President Tom Bradshaw said, “Disappointed doesn’t cover how I feel after this meeting. We have repeated our concerns about the impact on farming families; they don’t care. On the impact on families who can’t afford vast tax bills coming their way on the death of a loved one; they don’t care. On the elderly – the most vulnerable people in our farming community – who feel they are now a burden on their family; they don’t care.
“For the 70 million people living on these islands, food security matters. It matters more given the ever-increasing geopolitical uncertainty.
“We went into this meeting fully understanding the fiscal hole this government must plug, and we went into this meeting to offer a solution, a solution which has been suggested by other tax experts where the inheritance tax policy is based on a claw back mechanism.
“Put simply, farmers don’t get money when they inherit, they get the farm, the business asset, and often the debt. Any money they do get, they get when they sell. So, our suggestion is based on that premise. Our suggestion, which is almost revenue neutral meaning the Chancellor gets her planned income, is that if an inherited farm is sold then inheritance tax gets paid. Crucially, this would allow family farms that want to continue to produce the nation’s food to do so, while giving the Treasury what it wants.
“Despite the Chancellor calling for alternatives, and today the UK food sector went collectively to share those, I am hugely disappointed there was no response from Treasury today, no acknowledgement that this could be done better. This is the same Treasury department which admits it has not yet carried out impact assessments on its current policy.”
From April 2026, the 100 per cent rate of tax relief will continue for the first £1m of combined agricultural and business assets, with a reduced rate of relief of 50 per cent for amounts above this threshold.
Sam Kirkham, from rural accountancy firm Albert Goodman, set out what this would mean for a married farming couple. She said, “In the case of a married couple who’ve got two £1m allowances available then it might be that you could have a farm of up to £4m before there would be any inheritance tax payable. But once you’re paying inheritance tax, whatever cost the IHT is, it’s unaffordable. A six million pound farm between a married couple, they’d be looking at annual instalments of £50,000 a year, and therefore all of the profits would go on paying the inheritance tax they will be left with nothing to live off or to reinvest in the farm.”
At the meeting with Treasury, industry leaders suggested retaining 100 per cent agricultural and business property reliefs for qualifying assets.
However, they suggested that inheritance tax could be applied to these assets if sold within a certain time period post-death, payable out of the proceeds of sale.
CLA President Victoria Vyvyan said, “The Chancellor has previously asked for solutions, we have presented a compelling alternative but the government is deaf to the possibility.
“The clawback that the CLA and other stakeholders propose could limit the damage to businesses. It would allow rural and other family businesses to continue to make medium and long-term investment decisions, unlocking the stalled growth in business investment in the rural economy and keeping land in production.
“This plan would also target those who have bought land to shelter wealth for short-term gain, and will still deliver revenue that the Treasury needs.”
Prior to the meeting, farmers’ leaders had issued a joint statement which said, “Across every part of agriculture and its associated industries, and across every part of the UK, the message to the Treasury is the same – work with us to find solutions. Be prepared to listen not only to the UK’s farmers and growers, but also to food retailers and other companies in the food supply chain who have all said there must be change to this policy.”