UK government has softened its stance on agricultural tax after months of farmer protests

The UK government announced it will review its plans to increase tax revenue from farmers. This decision followed months of farmer protests over the government’s proposal to introduce inheritance and estate tax on farms in 2024, Reuters reports.

According to the UK government, the threshold for qualifying for inheritance and estate tax relief for individuals will be increased from £1 million ($1.35 million) to £2.5 million ($3.4 million) from April, reducing the number of farm owners and agricultural businesses facing higher taxes.

“We’ve listened to farmers across the country and are making changes today to protect more ordinary family farms,” ​​said Emma Reynolds, Secretary of State for Environment, Food, and Rural Affairs.

“It’s entirely fair that larger farms make a greater contribution, but we also support the farms and retailers that form the backbone of Britain’s rural communities,” the minister noted.

According to Tom Bradshaw, president of the National Farmers’ Union, the original proposal was a “devastating and cruel tax,” which his organization fought for 14 months.

“I’m delighted that common sense has prevailed and the government has listened to the concerns of citizens,” Bradshaw said. “From the outset, the government has stated that it is trying to protect family farms, and the changes announced today bring that closer to reality for many.”

The decision to raise the property threshold is the latest example of a change in direction by British Prime Minister Keir Starmer’s cabinet. In July, the government abandoned its plans to cut social spending, and a month earlier, it amended its proposal to reduce energy subsidies for the elderly.

Under the revised rules, a 100% exemption will apply to real estate worth up to £2.5 million ($3.4 million), with a 50% exemption for assets worth more. Spouses will be able to transfer agricultural assets worth up to £5 million ($6.8 million) to each other, the statement said.

The government estimates that these amendments will allow approximately 85% of inherited estates eligible for tax relief in the 2026/2027 season, including commercial property relief, to be exempt from inheritance tax.

Following the government’s announcement in 2024 that families engaged in farming would be subject to inheritance tax from the following year, farmers’ protests erupted in London.

The government stated that this measure was intended to generate additional revenue to cover burdensome public expenditure. Farmers warned that this would ruin family farms and reduce food production.

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