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A small number of wealthy landowners are backing a campaign led by lobby groups against the Labour Government’s changes to inheritance tax for large-scale farmers.
Groups such as the National Farmers Union and the Countryside Alliance have reacted with fury to changes to Inheritance Tax for farmers.
Multi-millionaire former Top Gear host – turned reality TV farmer – Jeremy Clarkson is among those accusing the Labour Government of “shafting” Britain’s agricultural sector.
Agricultural property was previously exempt from inheritance tax, no matter how much it was worth – on the rationale that farming businesses typically run in families and are handed down from generation to generation.
But Chancellor Rachel Reeves announced to the Commons in her Budget on Wednesday that the Government would be reforming this Agricultural Property Relief, saying: “From April 2026, the first £1m of combined business and agricultural assets will continue to attract no inheritance tax at all, but for assets over £1m, inheritance tax will apply with 50% relief, at an effective rate of 20%.”
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“This will ensure we continue to protect small family farms and three-quarters of claims will be unaffected by these changes,” the Chancellor said.
Treasury officials say the changes are likely to only affect the wealthiest 2,000 UK farming estates.
By contrast, there are around 190,000 farm holdings in the UK. The inheritance tax reforms, including changes to the agricultural exemption, are predicted by the Office for Budget Responsibility to raise £2 billion each year for the Treasury.
But major landholders and farming groups have been joined by opposition parties, including the Liberal Democrats, to hit out at the changes – presenting it as an attack on farming as a whole.
Jeremy Clarkson’s critics have accused him of opposing the changes due to self-interest (or rather, the interests of his family after he passes away).
The Conservative-supporting landowner previously said that he bought his 126-hectare £4.25m farm, ‘Diddly Squat’, to avoid paying inheritance tax on his estate. As The Guardian reported, in a 2021 interview with The Times Clarkson said avoiding inheritance tax was “the critical thing” in his decision to buy the farm.
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Meanwhile, the Country Land and Business Association has put out figures claiming that approximately 70,000 family farms will be impacted by changes to the Agricultural Property Relief scheme – figures that have been shared by the Liberal Democrats. Leader Ed Davey MP said the Government risked “creating a lost generation of farmers.”
However, the reality is that very few farming estates will have to pay any inheritance tax.
Tax expert and Labour supporter Dan Neidle, who runs the Tax Policy Associates research outfit, rejected the figures being put out by lobby groups as “hyperbolic fake stats”.
“The actual data shows…less than 500 farms/year will pay more tax as a result of this change every year. Possibly as few as 100. Only 500 farm estates claimed agricultural property relief (APR) of more than £1m in 2022,” he wrote on Threads.
Married couples can claim the £1m cap twice. Small farmers without other assets can use a so-called ‘nil rate’ band too. “So for a married couple running a farm, it could be worth £2.65m before the restriction on the relief costs them a penny”, Neidle added.
“That could mean as few as 100 farms per year are affected. And the 20% tax is only on the excess over the threshold, so for most of the 100, the additional tax will be reasonably small.”
Farmers are likely to plan for the change by taking out a life insurance policy protecting their estate against the tax, or passing over assets to their children early, such as before they retire.
Dan Neidle also told Byline Times: “For most farmers, the real cap [will be] £1.5m. For a married couple, £2.65m+…The only data that matters here is the actual data on APR claims [Agricultural Property Relief, the inheritance tax exemption for much agricultural property].
“That shows only about 100 farm estates each year are worth £2.65m. Out of the [roughly] 200,000 farms in the UK, that is a tiny number.”
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One rural MP accused farming lobby groups such as the National Farmers Union of “scaremongering”.
The MP told Byline Times: “Who do they represent? Small family farms, or the biggest estates buying out our small farmers?”
In response to claims in this piece, the National Farmers Union pointed us to this X post from their director of strategy Nick von Westenholz: “Many farmers are upset because they feel [the] new government hasn’t been straight with them. Last year Labour said it had “no intention of changing APR”.
The NFU spokesperson claimed that the Government’s figures on how many farmers will pay inheritance tax “will underestimate the size of [APR/relief] claims that might happen in future, as it does not include farms where a claim was also made for BPR [Business Property Relief] – e.g. for a diversified part of the business. That will now be included in the £1m threshold.”
“In practice, much more than a quarter of working farms – producing food, meeting environmental targets, providing jobs in remote rural areas at scale – are likely to be caught by the new threshold. I’d estimate at least half, possibly more.”
But Neidle said lobbyists will “point to anything, anywhere, except the actual APR data…They’re the only numbers that count.”
And those numbers clearly suggest that only a fraction of Britain’s farming estates, the biggest and wealthiest, will pay inheritance tax under the reforms.
Regardless of this reality, the issue could become the latest culture war bandwagon for the Right. And it’s one the new Conservative Party leader, announced this Saturday, is highly likely to jump aboard.
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Josiah Mortimer also writes the On the Ground column, exclusive to the print edition of Byline Times.
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