Concession on inheritance tax on farmers

Rachel Reeves has eased inheritance tax on agricultural property after pressure from farmers.  Probably more important than their demonstrations was pressure from Labour backbench MPs from rural seats.

As the chancellor made her budget speech on Wednesday, the Treasury announced changes it said could save farmers and business owners £30m next year when passing on property and £70m a year in the following four years. Farmers, who had driven tractors up to the doors of parliament, were protesting outside at the same time.

From April, farmers and small business owners who are married, are in a civil partnership or have deceased spouses, will be able transfer their inheritance tax allowance of up to £1m of full relief to each other if one of them dies without having used their allowance. The change means a farmer could leave their £1m allowance to their partner, and use their own £1m allowance, to pass on £2m of farmland to their children without paying inheritance tax.

Tom Bradshaw, the president of the National Farmers’ Union, said: “It’s good to see the government accepts its original proposals were flawed. But this change goes nowhere near far enough to remove the devastating impact of the policy on farming communities.”

He added that the change would help widowed farmers but “it does nothing to alleviate the burden it puts on the elderly and vulnerable” and urged the government to address this with further measures.