Farmers 'betrayed' by £1m inheritance tax relief cap

Farmers say new inheritance tax rules announced in the budget could force them to sell off more land

Farmers across the UK have met the news that inheritance tax relief for farms will be limited to £1m with anger.

The National Farmers' Union said it had been a “disastrous budget” for family farms, that would “snatch away the next generation’s ability to carry on producing British food” and see farmers forced to sell land to pay the tax.

Many have gone onto social media to express their dismay, as well as broadcasters Jeremy Clarkson and Kirstie Allsopp, who said the decision showed the government had "zero understanding of what matters to rural voters".

The government said it was still committed to supporting farmers and "the vital role they play to feed our nation".

Richard Payne has told his son to look outside of farming, as the business will no longer be viable

In Wednesday's budget, the Chancellor announced that, while there would continue to be no inheritance tax due on combined business and agricultural assets worth less than £1m, above that there would be a 50% relief, at an effective rate of 20%, from April 2026.

For years, the APR tax relief has enabled small family farms – including land used for crops or rearing animals, as well as farm buildings, cottages and houses - to be handed down through the generations.

Somerset farmer Richard Payne told the BBC that he had already told his son to think of going into something other than farming, as the business would become “completely unviable" as a result of inheritance tax.

He added that the £1m limit would only cover the smallest farms and that the change could result in more land being bought up by bigger businesses, changing the future shape of UK farming.

“Right across the land there will be a sea-change for the worse. Everyone says they don’t like mega-farms and they don’t want factory farming, but I can see that will be one answer out of all of this,” he explained.

Holly Purdey said that, while the changes were a blow to small farms, there may be more opportunities for new entrants to buy land

Fellow Somerset farmer Holly Purdey, who is vice-chair of the Nature Friendly Farming Network England, said “longevity and generational thinking” were often key motivators for farmers to care for the land - and that could be lost.

But, she added, any forced sale of land from larger farms as a result of the tax relief changes could help more newcomers get into farming.

On X, many farmers said the decision would mean the end of smaller family farms.

Jeremy Clarkson, who presents the TV programme Clarkson's Farm, posted - telling farmers not to despair but "just look after yourselves for five short years and this shower will be gone".

Broadcaster Kirstie Allsopp said the Chancellor had destroyed farmers' "ability to pass farms onto their children, and broken the future of all our great estates".

"It's an appalling decision which shows the government has zero understanding of what matters to rural voters," she added.

Shadow secretary of state for rural affairs, Steve Barclay, said on X that Labour had “broken a clear promise they made to our farmers” by changing the tax relief.

Victoria Vyvyan, president of the Country Land and Business Association, said the change was “nothing short of a betrayal”, as Secretary of State Steve Reed had last year said: “We have no intention of changing APR."

She added that it was estimated 70,000 farms could be adversely affected by the £1m cap: “This puts dynamite beneath the livelihoods of British farming, and flies in the face of growth and investment."

Tom Bradshaw, president of the NFU, said: “It’s been a disastrous budget for family farmers.

"The shameless breaking of clear promises on agricultural property relief will snatch away the next generation’s ability to carry on producing British food, plan for the future and shepherd the environment."

But the government said the change was only expected to affect around 2,000 estates each year.

Following Wednesday's budget announcement, the government said it would be maintaining the £2.4bn farming budget for England in 2025/26.

Food Security Minister Daniel Zeichner said: “Our commitment to farmers and the vital role they play to feed our nation remains steadfast."