Government Abruptly Ditches Farm Inheritance Tax Plan, Waters Down Threshold to £2.5 Million

The UK government has unexpectedly revised its plan to introduce a 20% tax on inherited farmland, increasing the proposed threshold from £1 million to £2.5 million. The decision, announced after MPs had left Parliament for the Christmas recess, follows intense pressure from farmers and some Labour backbenchers, who argued the original policy would unfairly target family farms.

According to a statement released by the Environment Department, the revised plan aims to protect more ordinary family farms from the tax. However, critics argue that the new threshold still falls short of addressing the concerns of all affected businesses. The government's original proposal, announced at last year's Budget, would have started imposing the 20% tax on inherited agricultural assets worth more than £1 million from April 2026, effectively ending the 100% tax relief that had been in place since the 1980s.

The climbdown is a significant victory for farmers, who have been protesting against the changes for months. At last month's Budget, farmers took to the streets to voice their opposition to the policy, warning that it would lead to the sale of family farms and the loss of rural livelihoods. The government's decision to increase the threshold to £2.5 million is seen as a compromise, but many farmers remain skeptical about the impact of the tax on their businesses.

The revised plan has also sparked concerns among some Labour backbenchers, who argue that the government's decision to increase the threshold is not enough to address the concerns of all affected businesses. "While the increase in the threshold is a step in the right direction, it still leaves many family farms vulnerable to the tax," said a Labour spokesperson. "We will continue to push for a more comprehensive solution that protects the interests of all farmers."

The government's decision to revise the plan has been welcomed by some farming groups, who see it as a recognition of the industry's concerns. "We are pleased that the government has listened to our concerns and taken steps to address them," said a spokesperson for the National Farmers' Union. "However, we will continue to work with the government to ensure that the revised plan is fair and effective."

The current status of the plan is that the revised threshold of £2.5 million will be implemented from April 2026, as originally planned. However, the government has promised to review the policy in the coming years to ensure that it is working effectively and fairly. As the debate around the plan continues, one thing is clear: the government's decision to revise the threshold is a significant development in the ongoing saga of farm inheritance tax.

In a statement, a government spokesperson said: "We have listened to the concerns of farmers and backbenchers and have taken steps to address them. We believe that the revised plan is a fair and effective solution that protects the interests of family farms while also generating revenue for the government." The government's decision to revise the plan is a testament to the power of lobbying and advocacy, and a reminder that the interests of farmers and rural communities are being taken seriously in the corridors of power.