Farmers’ inheritance tax figures are crystal clear, says Environment Secretary

The Environment Secretary has insisted the Government’s figures on the number of farmers impacted by rises in inheritance tax are “crystal clear”.

Steve Reed remained adamant that “three quarters of farmers will pay nothing” as a result of changes announced by Chancellor Rachel Reeves as he faced questions from the Conservatives about whether the figures had been “checked before the Budget”.

In last month’s Budget, Labour announced the 100% relief for family farms would be limited to only the first £1 million of combined agricultural and business property.

For anything above that, landowners will pay a 20% tax rate, rather than the standard 40% rate of inheritance tax (IHT) applied to other land and property.

The National Farmers’ Union (NFU) has disputed the Government’s claims about the number of farms that will be impacted, warning that plans to roll together allowances for both IHT relief and business property relief could leave far more agricultural businesses exposed to the tax.

Shadow environment secretary Victoria Atkins told the Commons: “The Secretary of State and the food minister claim that their family farm tax will affect only a quarter of farms.

“Yet after informed questioning by the NFU, the CLA (Country Land and Business Association), the TFA (Tenant Farmers Association) and this side of the House, the minister has now admitted they need to check their figures.

“Should the cost of the family farm tax to farming families have been checked before the Budget?”

Mr Reed replied: “HMRC data is crystal clear. Three quarters of farmers will pay nothing as a result of these changes, family farming will continue into future generations, just as it should do.”

Ms Atkins said: “He can explain the veracity and the accuracy of his figures next week, when thousands of farmers are coming to Westminster to rally against the family farm tax, the delinking of payments, the hike in national insurance and other tax hikes on working farms as a result of this Budget.”

Farmers are “reasonable people”, Mr Reed said, who will “want to look at the facts”.

He said: “They, like everybody else, will see that if they drill into that HMRC data, three quarters of them will end up paying no more under the new system than they do today.”

Earlier in the session, shadow environment minister Robbie Moore said “the Treasury doesn’t have the data” and the Government is only considering “past claimants of agricultural property relief, not combined with business property relief”.

Environment minister Daniel Zeichner replied: “We seem to be having this discussion endlessly, don’t we?

“And the figures are absolutely clear on agricultural property relief, and the reason I’ve kept asking for people to look at the detail, is because when you look at the detail what we will find – and listen to the tax experts, listen to the people who have actually looked at it in detail – fewer than 500 will be affected.

“That is the reassuring message that his side should be conveying to British farmers as well.”

Conservative former minister, Sir Jeremy Wright, said the Government had “justified” the raise in IHT “on the basis it’s concerned about people gaining short term tax advantage”.

He asked the minister if the department had “considered an approach – rather than the sweeping changes it made – which would limit the IHT exemption to those who could demonstrate the family farm had been in family ownership for a certain number of years.

“If that approach was explored, why wasn’t it pursued? And if it wasn’t explored, why not?”

Mr Zeichner said: “One of the beneficial aspects of this policy may be to get the generational shift that farming so much needs in this country.

“There are many parts to this policy. It is a complicated policy, and in future, we will have further discussions.”

Chair of the Defra select committee, Alistair Carmichael, congratulated the Government on the “achievement of the Budget” as he had “never seen such a degree of unity among farming organisations in their response to it”.

Mr Carmichael reiterated concerns expressed by other regional MPs that farming allowances in the Budget had been included in the Barnett consequentials for devolved administrations.

He said: “One point on which there seems to be no disagreement is that the removal of the ring fence around agricultural payments in Scotland, Wales and Northern Ireland, is a bad move. Nobody asked for it – why did they do it, and what did they expect to achieve with it?”

Mr Reed said the Government had announced the “biggest Budget” for farming which should be “welcomed by everybody in the sector”.

He added: “This is a Government that believes in devolution. We believe that the devolved administrations should have the right to take decisions about their own countries.

“So the consequentials mean that the appropriate level of funding will continue to those devolved administrations.

“Our support for devolution means that it will be the devolved administrations that take their own decisions about the best way to spend it.”