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Farmers are taking to the streets of Westminster again in a second protest over the government's proposals to include agricultural land in inheritance tax.
In the weeks since Chancellor Rachel Reeves' budget announcement, farmers and their representatives have been lobbying hard to overturn the decision.
Last month, around 13,000 farmers and supporters demonstrated outside Parliament; About 500 farmers are expected to arrive again with their tractors in Westminster on Wednesday.
The government wants farmers to pay tax on assets over £1m each at a new rate of 20 per cent, less than the 40 per cent most others will pay. However, before the Budget, they paid nothing for land subject to unlimited agricultural property relief.
For updates on today's protest in Westminster, click here to visit our live blog
The subsidy is on top of the £500,000 a typical homeowner receives if they leave their home to their children or grandchildren, so a married couple could receive up to £3 million from HMRC – a sum that will exclude most farms.
The NFU says the change, which comes into effect in April 2026, will force many farmers to sell their family farms to pay their tax bill. He claims the change was pushed through without any consultation from the farming community.
Groups such as the Liberal Democrats have suggested that up to 70,000 farms could be affected, although this figure assumes a tax-free inheritance limit of £1m rather than £3m.
The government says the UK's 500 largest farming properties will pay the tax each year, while smaller farms “will not be affected”, and independent analysis by Dan Neidle, a tax expert, suggests just 100 per year will be captured.
But inheritance tax is incredibly unpopular, and farmers who have staff to consider will also have to deal with higher national insurance bills from employers, as Mrs Reeves wants to lower the threshold at which it is paid.
“They're pretty angry,” says Sam Dewes, a tax partner whose clients include HW Fisher farmers.
And the math favors married couples, which many consider unfair. In fact, being married on an average farm makes all the difference.
According to estate agent Carter Jonas, the average arable land is priced at £9,667 per acre, while grazing pasture costs £7,833.
The average English farm was 87.9 hectares in size, or 217 acres in 2023, according to government figures. For a mixed half arable and half pasture farm, this values a medium-sized farm at £1.9 million per land, excluding buildings and equipment, putting it below the limit for a couple.
But, for a single farmer who has been divorced or never married, more than £400,000 will be left out of the free allowance, costing his heirs £80,000.
Since farm buildings and equipment will be added to that £1.9m, the tax bill would be higher for a single farmer who owns an average farm, and although he has 10 years to pay the inheritance tax bill, some land will probably have to pay to be sold.
There are ways to avoid paying, Dewes says.
The easiest thing is to give away the business. Hard-working farmers concerned about the tax can give their farms to their descendants – or whoever they want – and pay no tax as long as they live another seven years.
In practice, this means withdrawing from the business, which some may find difficult.
“To the extent that they're still working on it, they want to be able to call all the shots and make the decisions, and once they've given things away, it becomes a lot harder to do that, because it's no longer your responsibility.” thing,” says Mr. Dewes.
The feeling that it is necessary to be married or be able to accurately predict your own death to avoid the tax is probably the biggest source of unhappiness for many farmers, even if they are not affected by the tax, he says, since these circumstances seem unrelated. . to agriculture or justice.
“The people who could be most affected, which is probably the saddest thing about the new rules, would be those who, for example, are not married and die at 50, before they have had a chance to pass it all on while they are still alive, working very actively on the farm.”
Another option for farmers is to put the farm into a trust, although this costs money and is still subject to tax, albeit at a regular trickle rather than a one-off lump sum in the event of death.
But there could be a silver lining for family farmers in other ways.
In 2018, Farmers Weekly reported that non-farmer buyers outnumbered farmers when purchasing agricultural land for the first time.
Now, according to data from Strutt & Parker, farmers accounted for just 31 percent of land sales in the first nine months of this year, down from 68 percent in 2008.
Investors, the wealthy and so-called lifestyle buyers who want land for leisure have been displacing farmers and driving up land prices for some time now. If the benefit of avoiding inheritance tax evaporates, they may be less interested in buying, which will lower the price of land.
Cheaper land is good news for farmers expanding their businesses and also means it is harder to break the £1.5m or £3m barrier.
If the government wants to collect taxes from the wealthy who use farmland to evade taxes and protect working farmers, then it could continue with its plan but only trigger the tax on one sale, Dewes says.
“I think, in general, that element of politics [taxing investors not farmers] “It's not something that bothers people too much.”
That way, working farmers could continue without paying the tax, while those hoping to sell will only have to pay when the sale is completed and they have the money to do so.
NFU president Tom Bradshaw told the BBC that he and his members are willing to work with the government to stop the rich using land ownership to avoid taxes.
He said: “This policy is poorly thought out. There is still a 20 per cent benefit for the super rich to invest in farmland, and with the changes they have made to pensions, they have now incentivized people to take money out of pensions and invest in up to £1 million in land agricultural. land.”
