Anger as Rachel Reeves doubles down on claim that only a 'very small number' of farms will be hit by her inheritance tax raid

Anger as Rachel Reeves doubles down on claim that only a 'very small number' of farms will be hit by her inheritance tax raid
By: dailymail Posted On: November 04, 2024 View: 82

Rachel Reeves faced a fresh backlash last night after she doubled down on her claim that only a ‘very small number’ of farms will be hit by her inheritance tax raid.

The Chancellor slapped death duties on landowners who pass agricultural land on to their children in last week’s Budget, prompting fears it will spell the end of family farms.

The first £1million of combined business and agricultural assets will continue to attract no inheritance tax.

But for assets over this value, inheritance tax will apply with 50 per cent relief, at an effective rate of 20 per cent from April 2026.

During an interview on the BBC’s Sunday With Laura Kuenssberg show yesterday, Ms Reeves was played a clip of fifth-generation farmer Rebecca Wilson from Yorkshire.

Rachel Reeves has doubled down on her claim that only a 'very small number' of farms will be affected by her inheritance tax rise
The Conservatives said that the move would have 'catastrophic consequences' for family farms and would negatively impact food security (file photo)
Appearing on the BBC this morning, Ms Reeves was played a clip of Rebecca Wilson, a fifth-generation farmer from Yorkshire
Minette Batters said family farms are ¿cash poor¿ but ¿asset rich¿ and they will have to sell off land

Ms Wilson said: ‘Even using personal allowances, the Chancellor’s proposal could hit us with a tax bill of nearly £1million when my parents die.

‘How is the Chancellor going to ensure my generation will keep on farming in light of the changes announced in the Budget?’

Ms Reeves insisted only ‘a small number’ of farms would be affected by the changes, and claimed in ‘most cases’ a farm worth £3million can be passed on without paying any tax.

‘After that the tax rate for inheritance tax for agricultural property is 20 per cent compared to 40 per cent that everyone else pays, and you can pay that over a ten-year period interest-free...

‘I don’t think it is affordable to carry on with a relief like that when our public finances are under so much pressure.’ 

Shadow farming spokesman Robbie Moore, who worked as a farm business consultant before entering Parliament, told the Mail the Government was ‘sticking two fingers up to the farming community’, adding: ‘It will have catastrophic consequences for the average-sized family farm and will have a negative impact on food security.’

He said ministers appeared not to understand ‘the way the family farming set-up works’.

It comes after Baroness Batters, former president of the National Farmers’ Union, estimated some 70 per cent of farms will be impacted, while the Government claims 73 per cent will not be.

Baroness Batters told Times Radio that family farms are ‘cash poor’ but ‘asset rich’ and they will have to sell off land.

‘I think this is where we absolutely have to see the analysis of how they’ve done this. I don’t think they’ve separated tenants out. I’m a tenant farmer, 50 per cent of farmers in this country are tenants, they are often farming land that is owned by large landowners or institutional landowners like the National Trust, or the Crown Estates.’

On assets over £1million inheritance tax will apply with 50 per cent relief, at an effective rate of 20 per cent from April 2026 (file photo)
Industry leaders have also accused the Government of breaking ¿clear promises¿ not to tamper with exemptions for agricultural property (file image)

It comes after she wrote in the Mail On Sunday that the Treasury’s figures likely included so-called lifestyle farmers ‘that don’t produce significant amounts of food’.

She added: ‘Such small parcels of land are often bought by city folk looking for an exciting new vocation... Remove these “lifestyle” farms from the equation and those figures will flip.’

Tim Bonner, chief executive of the Countryside Alliance, told the Mail last night: ‘The Treasury itself estimates 500 farms will be affected by changes to inheritance tax every year.’

He claimed that up to 20,000 farms could be affected over a 40-year period and added: ‘That is not a small number.’

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