Government Ditches Farm Inheritance Tax Plan, Increases Threshold to £2.5 Million

In a surprise move, the UK government has revised its plan to introduce a 20% tax on inherited farmland, increasing the proposed threshold from £1 million to £2.5 million. The decision follows intense pressure from farmers and some Labour backbenchers, who argued the original policy would unfairly target family farms.

According to a statement released after MPs left Parliament for the Christmas recess, the revised plan aims to protect more ordinary family farms. However, critics argue it still falls short of addressing the concerns of all affected businesses. The original proposal, announced at last year's Budget, would have imposed a 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.

Farmers have been protesting the changes since the original announcement, with demonstrations taking place at last month's Budget and other events. The protests have been led by farmers who fear the tax would lead to the loss of family farms, which are often passed down through generations. "This is a victory for common sense and for the thousands of family farmers who have been fighting against this unfair tax," said a spokesperson for the National Farmers' Union.

The government's decision to increase the threshold to £2.5 million has been met with mixed reactions. While some farmers have welcomed the change, others argue it still does not go far enough to protect family farms. "While the increased threshold is a step in the right direction, it still leaves many family farms vulnerable to this unfair tax," said a Labour backbencher who had been critical of the original proposal.

The revised plan has been welcomed by some industry experts, who argue it will help to protect family farms and maintain the UK's agricultural sector. "This is a pragmatic decision that recognizes the importance of family farms to the UK's agricultural sector," said a spokesperson for the Agricultural Industries Confederation.

The government's decision to revise the plan comes after months of pressure from farmers and Labour backbenchers. The original proposal was announced at last year's Budget, and since then, farmers have been protesting the changes. The revised plan is expected to be implemented from April 2026, although the exact details are still to be confirmed.

In a statement, the Environment Secretary said the revised plan was designed to "protect more ordinary family farms" and ensure that the tax "does not unfairly target family businesses." However, critics argue that the revised plan still does not address the concerns of all affected businesses.

The government's decision to revise the farm inheritance tax plan is the latest in a series of changes to the UK's tax policies. The move is seen as a victory for farmers and Labour backbenchers who have been fighting against the original proposal. However, the revised plan has also been met with criticism from some quarters, who argue it still does not go far enough to protect family farms.

As the debate continues, farmers and industry experts will be watching closely to see how the revised plan is implemented and whether it will have the desired effect of protecting family farms. The UK government has said it will continue to work with farmers and industry experts to ensure that the tax is fair and does not unfairly target family businesses.