Starmer defends inheritance tax changes as row with farmers ramps up

Sir Keir Starmer has again defended changes to inheritance tax for farms, insisting that most will be unaffected and that the Government just needs to “keep explaining” how it will work.

A row has erupted over the taxes for farms worth more than £1 million, exacerbated by uncertainty about the figures Chancellor Rachel Reeves based the decision on.

Treasury data shows that around three quarters of farmers will pay nothing in inheritance tax as a result of the controversial changes announced in the Budget last month.

The vast majority of farms are going to be totally unaffected by this. And it's really important we get that through

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 Prime Minister said during a visit to North Wales on Friday: “I know some farmers are anxious about the inheritance tax rules that we brought in two weeks ago.

“What I would say about that is, once you add the £1 million for the farm land to the £1 million that is exempt for your spouse, for most couples with a farm wanting to hand on to their children, it’s £3 million before anybody pays a penny in inheritance tax.

“And that is why the vast majority of farms are going to be totally unaffected by this. And it’s really important we get that through.”

He added: “So we just need to keep explaining how that works, because I know it’s caused some anxiety.”

The inheritance tax changes for farming businesses in the Budget limit 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.

On Saturday, farmers in North Wales will gather on tractors for a protest against the changes in Llandudno to coincide with the Welsh Labour Conference.

The National Farmers’ Union (NFU) is holding a mass lobby of MPs on Tuesday as part of efforts to force a Government rethink and a separate rally is taking place on the same day on Whitehall, opposite Downing Street.