UK farmers challenge Autumn Budget tax measures

More than 10,000 farmers descended on central London on Tuesday to protest over changes announced in the government's Budget for a new inheritance tax, which many fear could destroy much of the country's agricultural industry.

Farmers protest in London about changes to inheritance tax

David Sapsted

20 November 2024

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In the Autumn Budget – the Labour Party's first since its election landslide in the summer – it was announced that, from April 2026, a 20% tax would be applied to inherited agricultural assets worth more than £1 million. For the past 40 years, these family assets had been exempt from such a tax.The National Farmers' Union (NFU) has branded the move “disastrous” for thousands of farmers, although the government maintains only about 500 of the richest holdings will be affected.

Backlash over Budget announcement

For its part, the Country Land and Business Association (CLA, formerly the Country Landowners' Association) estimated that 70,000 of the nation's 210,000 farms could be impacted over the coming decades, while an analysis by BBC Verify put the total likely to be affected at about 500 a year.While the argument over the figures goes on, Tom Bradshaw, the NFU president, has accused the government of “betrayal” and described the inheritance tax change as "completely unjust".He told an NFU meeting held before the public protest on Tuesday: “I don’t think I’ve ever seen the industry this angry, this disillusioned and this upset. And given what we’ve had to be angry about in recent times, that’s saying something.“To launch a policy this destructive without speaking to anyone involved in farming beggars belief. Let us remember that they [the Labour Party] promised, nearly a year ago, they wouldn’t be changing Agricultural Property Relief. It’s not only been bungled in delivery, it’s also nothing short of a stab in the back.”

'An inflationary budget for food production'

Mr Bradshaw said that after years of governments changing their agricultural policies – exacerbated by the UK's withdrawal from the EU – the industry had had to tolerate 18 months of some of the worst weather on record and new taxes on fertilisers.“The massive inflationary pressure for the whole supply chain, but in particular the horticultural sector that produces fresh produce is simply unimaginable,” he added.“The impact on shelf prices is going to have to be dramatic. It’s an inflationary Budget for food production, and you in this room have nothing left to give.“We know what this means for our families, for our children, for our future. We know the horrendous pressure it is putting on the older generation of farmers who have given everything to providing the food for this country.“We know that any tax revenue will be taken from our children and raised from those that die in tragic circumstances or within the next seven years.”

Tax rises 'a threat to farming'

The CLA report said that, despite government assurances that “small farms” would not be impacted, its own assessment indicated the tax changes “could prove a death sentence for many small and medium-sized farms”.According to the organisation's analysis, a typical 200-acre arable farm owned by an individual with an expected annual profit of £27,300 would face an inheritance tax liability of £435,000. The inheriting family members would have ten years to pay this amount and, said the CLA, “this would require the farm to allocate 159% of its profit each year to cover the tax bill”. To meet this bill, “successors could be compelled to sell 20% of their land”.Gavin Lane, deputy president of the CLA, said: “Either the government isn’t being honest with the public about the true impact of these reforms, or they don’t understand the nature of rural businesses. I'd like to believe it is the latter and that they are prepared to listen to our input rather than continually trying to dismiss it.“While they frame this as a tax on the wealthy, the reality is that ordinary family farms will be hit just as hard. Asking farms to use their income to pay a huge capital tax bill over ten years, if indeed it is possible, will threaten the future of investment and the viability of the business.”

Government pledges to support farming's sustainability

But Prime Minister Keir Starmer insisted on Tuesday that, while he understood the concerns of the industry, “the vast majority of farms would be unaffected” by the tax changes.He said that the government had pledged £5 billion over two years for “farming and food sustainability”, adding: “That's hugely important for farmers, an additional amount for flooding that impacts them and on disease outbreak.”And Environment Secretary Steve Reed told the BBC: “It’s only right to ask the very wealthiest farmers and those wealthy individuals who have been buying up agricultural land to avoid their own inheritance tax liability, to pay their fair share.”But protesters taking to the streets of Westminster were not impressed. Richard Wainright, a fourth-generation farmer at the protest, told reporters that he and other farmers might decide to strike if the changes to inheritance tax were not reversed.Mr Wainright, 58, from Halifax, said he hoped it would not come to that “because that's seriously going to impact the food chain” but he feared his family might have to sell 20% of their farm to cover a tax bill of around £600,000.David Spours, a tenant farmer from Northumberland, claimed that “every single farmer” in his area would be affected by the tax change. He also feared changes to carbon emissions rules would increase the price of fertilisers, resulting in his prospects “looking pretty grim”.While the disagreements continue over exactly how many farms are likely to be affected by the tax changes, BBC Verify analysed government research which suggested that an average farm last year made a profit of about £45,300, “although that may be overstated as it is based on a survey that excluded farms that bring in the least money”.Other government figures estimated that the average return on capital for farms (the amount of value farmers can extract from such things as farmland and machinery by growing crops) is only about 0.5%, which is low compared to virtually all other business sectors.

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