Government proposals to levy a charge on inherited farming assets have been significantly revised, with the proposed threshold increasing from £1m to £2.5m.
This rethink follows months of protests by the farming community and disquiet from some Labour MPs.
Original Plan
At last year's Budget, ministers said they would start introducing a one-fifth levy on passed-on agricultural assets worth more than £1m from April 2026.
In her initial fiscal event in 2024, Chancellor Rachel Reeves announced she would be reversing the exemption on farmland that had been in place since the 1980s.
The measure would have seen passed-down agricultural assets worth over £1m taxed at 20%, half the standard inheritance tax rate, raising an projected £520m each year by 2029.
Ministerial Comments
"We have heeded the calls to farmers across the country and we are introducing modifications today to shield more typical family farms."
"It's only just that larger estates pay a greater share, while we stand by the farms and trading businesses that are the foundation of Britain's countryside."
Industry Reaction
The Head of the National Farmers' Union applauded the adjustment, saying it "takes out many family farms from the path of damaging policy."
The Head of the Country Land and Business Association remarked: "The government deserves credit for identifying the flaws in the first proposal and adjusting its approach."
He went on to say, "That said, this revision only limits the damage - it doesn't eliminate it totally. Many family businesses will own enough high-value equipment and land to be priced above the threshold, yet still operate on such small profit margins that this levy remains unaffordable."
Cross-Party Response
In the year-plus since the first announcement, there have been frequent protests by farmers close to Parliament.
Some backbenchers in the countryside have also voiced unease. At a recent legislative vote on the plan, a twelve backbenchers did not vote and one voted against.
The opposition leader commented on social media: "This battle isn't finished. Other family businesses are still impacted by Labour's tax raid, and we will keep pushing until the tax is scrapped from them too."
A Liberal Democrat spokesperson argued: "It is completely unacceptable that family farmers have been put through over a year of anxiety and stress since the government first floated these changes."
The political party deputy leader remarked: "This cynical U-turn - whilst an improvement - does little to address the year of worry that farmers have faced... with British agriculture hanging by a thread, the government must go further and abolish this unfair agricultural levy."
Revised Details
The government had maintained that the original measure would help smaller farms while stopping large estates from buying farmland as a tax avoidance scheme.
Yet, it has now stepped back from the original proposal increasing the exemption limit to £2.5m.
Alongside an allowance which allows farmers to pass on assets to their spouses without incurring tax, this new government concession means a couple could pass on up to £5m in applicable assets.
