THE UK government said on Tuesday it will raise inheritance tax thresholds for farmers’ estates from £1 million to £2.5 million, after months of protests over the policy.
The change, due to take effect in April, will allow spouses or civil partners to pass on up to £5 million in qualifying agricultural or business assets between them before paying inheritance tax, in addition to existing allowances, the government said.
Assets above that level will receive 50 per cent relief.
The government said the number of estates facing higher inheritance tax will fall from around 2,000 to up to 1,100. For agricultural estates, the number will drop from 375 to 185.
The move follows months of protests by farmers over the initial tax changes announced in Labour’s autumn 2024 budget, including tractor convoys that slowed traffic in central London.
Under the earlier proposals, farmers would have been required to pay inheritance tax on their assets for the first time in decades, with 100 per cent relief available only on the first £1 million of property.
A recent independent review for the government said the proposals had led to farmers contemplating suicide to avoid the tax changes.
National Farming Union president Tom Bradshaw said the announcement would be a "huge relief to many" and would "greatly" reduce the tax burden for many family farms.
"We have listened closely to farmers across the country and we are making changes today to protect more ordinary family farms," environment minister Emma Reynolds said while announcing the policy.
Conservative Party leader Kemi Badenoch said it was a "huge U-turn by the government" on its "cruel, immoral" farm tax plans.
"It would have pushed farms to the brink, damaged our food supply, and hurt the people who work long hours to feed the country," she posted on X.
The government said the reforms would make the tax system fairer by ensuring only the largest estates face higher bills.
It said an amendment to the Finance Bill will be introduced in January to implement the changes.
