Under the government’s plans, from April 2026, inherited agricultural assets worth more than £1m, which were previously exempt, will be subject to inheritance tax at 20%.
The Country Land and Business Association (CLA) has estimated that the tax change, external “could harm” 70,000 UK farms. This would represent roughly 33% of the 209,000 UK farms, as identified by the Department for Environment, Food & Rural Affairs (Defra).
The CLA figure is not an annual one and, clearly, a farm would only be potentially subject to inheritance tax if it was passed on, following a death.
The government, in trying to assess the impact of its tax change, looked instead at recent figures for the number of actual claims for tax relief for agricultural estates.
At this point, it’s worth stressing that an agricultural estate is not the same as a landed estate, or farm: an “estate” is a legal term for the value of the money, property and possessions an individual passes on upon their death. In this case, it’s an estate that includes some agricultural land.
The Chancellor, Rachel Reeves, has claimed up to about 520, external inherited agricultural estates a year “will be impacted to some extent by these changes”.
The Environment Secretary Steve Reed has said “three quarters of farmers, external will pay nothing as a result of the changes”.
But farming groups continue to dispute the government figures, with the National Farmers’ Union (NFU) pointing to other figures, external from Defra which it says “show that only 34% of farms are under £1 million net worth”. This would imply that around two thirds of farms could potentially be affected by the Budget tax change.
The NFU has also released analysis which it says, external shows that “around 75% of commercial family farms will be above the £1 million threshold”.
Below, we look into the challenges when it comes to reaching an exact conclusion on the numbers affected, and provide more detail on which figures are more reliable – and explain why.
Source:
www.bbc.com
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