The new shadow environment secretary has said the “crass decision” to remove some inheritance tax relief for farms has betrayed the Government’s lack of knowledge about the countryside.
Victoria Atkins said the move had “consigned family farms and businesses to being sold off and split up as families cannot afford massive tax bills”.
Under plans announced in the Budget, inheritance tax will be charged at 20% on agricultural assets above £1 million, although Chancellor Rachel Reeves has said that in some cases the threshold could in practice be about £3 million.
While the 20% figure still represents a relief of 50% compared to the standard rate, farming unions and opposition parties have criticised the move, arguing that it will make British farms uncompetitive.
Writing in the Telegraph newspaper, Ms Atkins said: “This is a serious mistake that Labour has made in their Budget. Their lack of understanding of the realities of farming was revealed in the crass decision to slash years of careful tax policy to keep family farms intact and protected from inheritance tax.”
She suggested the move would make the UK more reliant on imports, adding: “If farmers have to set aside money for a potential tax raid rather than investing in the farm, it will no doubt impact food production, increase prices and make British farmers less competitive.”
Ms Reeves has defended her proposed reforms to inheritance tax on farms by claiming it is not “affordable” to keep the current system.
The Chancellor used her first Budget to announce a change to agricultural property relief (APR) and business property relief (BPR) from April 2026 in a bid to secure more money for public services.
Budget documents state the Government wants to restrict the “generosity” of APR and BPR for the “wealthiest estates”.
The first £1 million of combined business and agricultural assets will continue to attract no inheritance tax.
But for assets over £1 million, inheritance tax will apply with 50% relief, at an effective rate of 20%.
The Chancellor said “only a very small number of agricultural properties” will be affected, although the National Farmers’ Union warned the reforms could force farmers to sell their family farms to pay the inheritance tax bill.
Ms Reeves said many “difficult decisions” were needed in the Budget in order to fix public services and place the economy on a firmer footing.
It comes as farmers plan to stage a mass demonstration outside the Northern Farming Conference on Wednesday to protest the changes.
Organisers say hundreds of people – some in tractors – are planning to attend the event in Hexham, Northumberland.
