Government defends farm tax changes as support for protests swells

The Government has continued to defend changes to inheritance tax for farmers as support swells for planned protests next week.

And as the row on the introduction of taxes for farms worth more than £1 million shows no sign of abating, new figures from the Environment Department (Defra) showed falling farm incomes this year.

In the Commons, Environment Secretary Steve Reed remained adamant “three quarters of farmers will pay nothing” in inheritance tax, as a result of the controversial changes announced in the Budget last month.

But farmers have challenged the figures, pointing instead to data from Defra which suggests 66% of farm businesses are worth more than the £1 million threshold at which inheritance tax will now have to be paid.

The National Farmers’ Union (NFU) is calling for the tax to be scrapped, and is holding a mass lobby of MPs on Tuesday, with 1,800 members gathering in Westminster – three times the original number planned – as part of efforts to force a Government rethink.

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

And a separate rally taking place on the same day in central London has had to move location because of growing support from farmers, with organisers saying it will now take place on Whitehall, opposite Downing Street.

Organisers say the rally aims to send a message in the heart of London that family farms and the rural community “stand united against the Government’s catastrophic Budget”.

Farmers will hear from celebrities and farming leaders, including NFU president Tom Bradshaw, and are being asked to wear their boots and wellies as a sign of working people, and bring British produce for a mass food bank donation.

While a procession to Parliament Square will be spearheaded by children on toy tractors, organisers have told those coming to the rally they should not bring their farm machinery.

Farmers have reacted with anger and dismay over the inheritance tax changes for farming businesses in the Budget, which limits the 100% relief for farms 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.

Quizzed in the Commons on the dispute over how many farms would be affected by the changes, Mr Reed insisted Treasury data was “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,” he told MPs.

The only sensible course of action is for the Treasury to reverse this decision and soon

But Mr Bradshaw said the latest figures on farm incomes paint a “stark picture of the challenges facing many farmers” who are dealing with one of the wettest winters in decades, high input costs, lower commodity prices and a reduction in subsidies amid a shift to environmental payments.

The figures show income falls of 73% for cereal farmers and 68% for dairy farmers in 2023/24, after two very strong years for both sectors.

And he said that instead of a Government creating policies to support British agriculture and help farmers and growers build financial resilience into their businesses, the recent Budget has “left farmers reeling”.

Mr Bradshaw said: “Many will be faced with a tax bill of millions. Some will be forced to sell all or part of their farm to raise the funds.”

And he said the tax “threatens our food security” and – along with other changes in the Budget – to push up prices for consumers, as he accused the Treasury of getting its figures wrong on how many farms would be affected.

“The only sensible course of action is for the Treasury to reverse this decision and soon,” he said.