'Farmers won’t forget and they won’t forgive' Lincolnshire MP welcomes government climbdown on inheritance tax

Christmas has come early for rural communities, as, following a year of protests, the Government has announced it will raise the inheritance tax relief threshold for farmers from £1 million to £2.5 million.

Ministers have “listened to concerns” of the farming community and businesses, the Department for Environment, Food and Rural Affairs (Defra) said on Tuesday (December 23).

Unveiled at Labour’s first Budget last year, the original Treasury plans to raise money as farmers pass their businesses from generation to generation triggered protests with tractors outside Parliament and criticism from some Labour MPs in rural seats. Baroness Minette Batters, the former head of the National Farmers’ Union (NFU) who led an independent review for the Government, also warned that the proposals had led to farmers contemplating suicide to avoid the tax changes.

Farmers say the change will improve matters for the smallest family farms, but with inflation, the new threshold may still soon catch up with those businesses who may have sizeable assets in land and equipment but very tight margins.

Lincolnshire MPs including Victoria Atkins (Louth and Horncastle), Dr Caroline Johnson (Sleaford and North Hykeham), Sir Edward Leigh (Gainsborough) were among politicians who joined the Westminster protests during the year.

Ms Atkins, Shadow Secretary of State for Environment, Food and Rural Affairs, reacted on social media: "It has taken 14 months of relentless campaigning to get this Labour government to admit they are wrong and to make a partial u-turn on the family farm tax.

"In fact only last Thursday I put to the farming minister the tragic letter from Mrs Denton, a 90-year-old grandmother, who wanted to ask the Prime Minister the date by which she should die to avoid the break up of her farm and the selling off of her children’s livelihoods.

"It has taken all of this, and I have huge thanks and admiration for all of the farmers that I have stood alongside, that we protested with and campaigned for and have corresponded with. But it should not have taken this distress and pain and panic that rural communities have felt over the last 14 months. So, the government’s admitted it’s got it’s maths wrong, but it has come at a huge cost and I know for a fact farmers won’t forget and they won’t forgive.”

She added Conservatives will continue our fight to scrap the taxes entirely.

Sleaford MP Dr Caroline Johnson added: “The Government’s most recent (partial) u-turn is a win for hardworking farmers who explained to the public why this tax was so damaging and who didn’t give up and for the Conservative Party’s campaign alongside them against Labour’s Family Farm Tax.”

She said the “cruel policy” had already caused so much damage and distress, adding: “This is only a partial U-turn and other family businesses are still impacted by Labour’s tax raids, which we will continue to campaign against.“

NFU president Tom Bradshaw said the announcement would be a “huge relief to many” and would “greatly” reduce the tax burden for many family farms.

He said: “Changes to Agriculture Property Relief (APR) and Business Property Relief (BPR) announced in last year’s budget came as a huge shock to the farming community. Until that moment, the best tax planning advice was to hold on to your farm until death and pass it on to the next generation who could continue to run a viable farming, food producing business.

“The original changes to APR and BPR, contained within the Finance Bill, resulted in a pernicious and cruel tax, trapping the most elderly and vulnerable people and their families in the eye of the storm. The NFU and its members have stood strong for what we believed in. I am thankful common sense has prevailed and government has listened.”

The higher threshold, which will take effect in April, will allow spouses or civil partners to pass on up to £5 million in qualifying agricultural or business assets between them before paying inheritance tax – on top of existing allowances, Defra said.

Above that allowance, farmers will get 50 per cent relief on qualifying assets and will pay a reduced effective rate of up to 20 per cent, rather than the standard 40 per cent. Farmers currently do not pay inheritance tax on agricultural and business assets which they pass on.

The number of estates facing higher inheritance tax will be reduced from around 2,000 under original plans to up 1,100, hitting only the largest farms, according to the Government.

Under Labour’s initial proposal, the full 100 per cent relief was to be restricted to the first £1 million of property. The plans caused consternation among some Labour backbenchers, with Penrith and Solway MP Markus Campbell-Savours losing the party whip earlier this month for voting against them.

Sir Keir Starmer last week told the Liaison Committee he understood farmers’ concerns, but defended the “sensible reform”.

Announcing the tax relief threshold hike, Environment Secretary Emma Reynolds said: ”Farmers are at the heart of our food security and environmental stewardship, and I am determined to work with them to secure a profitable future for British farming. We have listened closely to farmers across the country and we are making changes today to protect more ordinary family farms.

“We are increasing the individual threshold from £1 million to £2.5 million which means couples with estates of up to £5 million will now pay no inheritance tax on their estates. It’s only right that larger estates contribute more, while we back the farms and trading businesses that are the backbone of Britain’s rural communities.”