Government Abruptly Ditches Farm Inheritance Tax Plan, Increases 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. According to an announcement made after MPs left Parliament for the Christmas recess, the decision follows intense pressure from farmers and some Labour backbenchers who argued the original policy would unfairly target family farms.

The revised plan aims to protect more ordinary family farms, but 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 had been protesting against the changes since the announcement, with demonstrations taking place at last month's Budget. The protests were met with concern from some Labour backbenchers, who argued that the policy would disproportionately affect family farms and small businesses. According to a Labour source, the party's MPs had been working behind the scenes to persuade the government to reconsider the policy.

The government's decision to increase the threshold to £2.5 million is seen as a compromise, but it remains to be seen whether it will be enough to satisfy the concerns of farmers and small business owners. "This is a welcome step, but it's still not enough," said a spokesperson for the National Farmers' Union. "We will continue to work with the government to ensure that family farms are protected from this unfair tax."

The revised plan has been met with mixed reactions from experts and stakeholders. While some have welcomed the increase in the threshold, others argue that it still falls short of addressing the concerns of all affected businesses. "The government's decision to increase the threshold is a step in the right direction, but it's still a complex issue," said a spokesperson for the Agricultural Industries Confederation. "We will continue to work with the government to ensure that the policy is fair and effective."

The current status of the policy remains uncertain, with the government yet to provide a clear timeline for implementation. However, it is expected that the revised plan will be put to a vote in Parliament in the coming months. As the debate continues, one thing is clear: the government's decision to increase the threshold to £2.5 million is a significant concession, but it remains to be seen whether it will be enough to satisfy the concerns of farmers and small business owners.

In a statement, a government spokesperson said: "We understand the concerns of farmers and small business owners, and we are committed to ensuring that the policy is fair and effective. We will continue to work with stakeholders to ensure that the policy meets the needs of all affected businesses."