Farmers Protest Inheritance Tax Changes, Fearing Food Crisis and Investment Decline

Farmers Protest Inheritance Tax Changes in Whitehall Rally

Thousands of farmers are expected to gather in Whitehall, London, to protest against the Labour government's extension of inheritance tax to agricultural property. Industry leaders claim this plan, introduced by Chancellor Rachel Reeves in her first Budget last October, is "marching the UK into a food crisis."

The changes involve imposing inheritance tax on farms worth more than £1 million, with an effective tax rate of 20% on assets above the threshold, instead of the usual 40%. The government argues that this is necessary to fill a £22 billion fiscal hole inherited from the Conservatives and to make the tax system fairer. They claim that 7% of the wealthiest estates account for 40% of the total value of agricultural property relief, costing the Treasury £219 million.

However, farmers argue that while farms may have a high nominal asset value, the returns from farming are often very low. This means that farming families may not have the reserves to pay for inheritance tax liabilities without selling off assets. The National Farmers' Union (NFU) president, Tom Bradshaw, warns that the changes could undermine investment and affect tenant farmers. He also expresses concern that the government does not understand food production.

The government estimates that around 500 estates a year will be affected by the changes. However, the NFU argues that more farms could be impacted due to the combined business property relief and agricultural property relief, with a single £1 million allowance before inheritance tax is levied. They point to figures from the Environment Department (Defra) showing that 66% of farm businesses in England have a net value of more than £1 million.

The government counters that looking at asset value alone does not necessarily mean the farm will be affected, as it depends on individual circumstances. However, the NFU remains concerned about the impact of the changes on the farming industry and food production in the UK.