Children attend school in wellies and farmers travel to Westminster to protest tax changes

Lots of South Hams' school children went to school in wellies today, and farmers are headed to Westminster, in protest to the change in inheritance tax around farms. 

Currently, farms are exempt from inheritance tax through Agricultural Property Relief. From 2026, farming families will have to pay 20% (standard inheritance tax is 40%) on property and land worth more than £1 million. 

While the inheritance laws will make it so that farmers can give up to £3 million tax free (if a farm is jointly owned by two people and the person inheriting is a direct descendant) and pay the tax bill over ten years (rather than immediately with standard inheritance tax), many farmers feel that this will hit hard working family farms. 

Matt Darke, Coleridge Farm near Chillington, visited London today as part of a group of farmers who are wanting to voice their “outrage” at the changes to the inheritance tax laws governing farms. 

He explained: “We want to talk to MPs and explain the damage this will do to family farms. We think around 70% of farms will be affected, especially when you include the business side of the farms and machinery etc. 

“The only ones that will fall under this net will be the hobby farms because they’re smaller. Essentially this will impact all working farms. 

“There is almost no profit in farming and most of the value is tied into assets. We don’t do this job for any other reason than to provide a livelihood for our families. The only way people would be able to pay this is to sell off land that they have passed down for generations." 

Talking about the impact to farms in the South Hams, with higher land prices, Matt explained that while the land costs more in this area, the farms tend to be smaller, so the effect is essentially the same across the country. 

“We live in a very farming heavy area”, he explained, “and it has knock-on effects to industries too - contractors, engineers, food retailers, butchers, feed merchants. It is all linked together in ways that people don’t really realise. 

“But the main issue is food security in this country. We all want our food grown locally, but that’s not going to happen if farmers are pushed under.

“In order to provide food for the country, farmers have to survive. When my son was putting his wellies on for school this morning, it was really hard to explain to him why we are producing food for everyone but we don’t get any support as farmers. Why choose farmers to target?

“We have already seen people decide not to invest in their farms because it won’t be worth it in the long run. Investment in buildings or equipment won’t be seen in our pockets for 10 to 15 years but we won’t be able to afford to pass that down to our kids. Why would people bother?

“I think we have a lot of support in the country and I hope we can make enough noise for it to make a difference.” 

The National Farmers Union analysis of Agricultural Property Relief suggests that “scrapping it would only save the Treasury £120 million a year, whilst the negative impact on farming would be much larger”.

The Union recently wrote to Chancellor Rachel Reeves about “the vital need to protect family farms and tenants through APR”, and NFU President Tom Bradshaw also made the case to the Chancellor at the Labour Party Conference in Liverpool this year.

Mr Bradshaw said in October: “NFU members keep seeing these alarming media reports and they are understandably worried and upset. Major APR changes would put at risk many farming families’ succession plans and consequently undermine the government’s own ambitions for food and environmental security.

“I’m also very concerned that changes would damage the tenanted sector, as landowners will have much less incentive to let land to agricultural tenants. In short, this ‘Family Farm Tax’, which is what removing APR amounts to, could be too much for some farming businesses which are already struggling with numerous challenges.

“Farming is often a generational business, and APR is what makes it possible for small family farms to pass from one generation to another. We’ve given the Treasury the details and evidence for our concerns and we stand ready to meet ministers and officials again, at any time, to reinforce the point that a Family Farm Tax could push many small family farming businesses over the edge.”

Many incredibly wealthy landowners have avoidance inheritance tax through Agricultural Property Relief for generations, with even Jeremy Clarkson telling The Times in 2021 that avoiding inheritance tax was "the critical thing" in deciding to buy the 1,000 acre Diddly Squat Farm near Chipping Norton.

But changes to inheritance tax rules that impact family farms that produce our food, feels counter-productive. 

Local MP Caroline Voaden has said: “The farming community has reacted in horror to a change that could see families hit with huge tax bills when a farm is passed down from one generation to the next.

“The change was aimed at big estates and landowners who have bought agricultural land to avoid inheritance tax. But smaller family farm owners are worried. While their farms may be worth a lot on paper – mainly due to the high cost of land in the UK – it is notoriously difficult to make an income from farming, so paying any kind of inheritance tax bill could force them into having to sell land.

“We would have preferred to introduce a family farm test as exists in some other countries, to close the loophole of corporations buying land and exploiting exemptions, while protecting genuine farms.

“We cannot afford to endanger food security in this country or present any more challenges to farmers than they already face. With rising input costs, higher interest rates, pressure to fulfil environmental objectives and a supermarket system that works against them, it's a tough place to be right now and rural economies depend heavily on the farming backbone.

“The Liberal Democrats backed British farmers during the election, calling for an extra £1bn in support. We were sorry not to see this in the budget, and we will continue to be a strong voice for our rural communities.” 

Chancellor Rachel Reeves and Environment Secretary Steve Reed today released a joint statement where they insisted they were “steadfast” in their commitment to UK farming and “recognise the strength of feeling expressed by farming and rural communities” in recent weeks.

The statement said: “It’s why we are investing £5 billion into farming over the next two years, the largest amount ever directed towards sustainable food production, rural economic growth and nature’s recovery in our country’s history.

“But with public services crumbling and a £22 billion fiscal hole that this Government inherited, we have taken difficult decisions.”

They argued the Budget reforms to Agricultural Property Relief would mean wealthier estates and the most valuable farms “pay their fair share to invest in our schools and health services that farmers and families in rural communities rely on”.