Government Eases Farm Tax Rules Following Farmer Backlash

Britain’s government announced on Tuesday that it will significantly scale back its controversial plan to raise more tax revenue from farmers, following months of sustained protests triggered by changes to inheritance tax rules for agricultural land.

Under the revised policy, due to take effect in April, the threshold for individual inheritance tax relief on farms will increase to £2.5 million ($3.4 million) from the previously announced £1 million. The move is expected to substantially reduce the number of farmers and agricultural business owners facing higher tax bills.

Environment Secretary Emma Reynolds said the government had responded to concerns raised by the farming community.

“We have listened closely to farmers across the country and we are making changes today to protect more ordinary family farms,” Reynolds said in a statement.

“It’s only right that larger estates contribute more, while we continue to back the farms and trading businesses that are the backbone of Britain’s rural communities.”

Revised Rules Offer Greater Relief for Family Farms

Under the updated framework, 100% inheritance tax relief will apply to agricultural assets valued up to £2.5 million, while assets above that threshold will receive 50% relief. Spouses and civil partners will be able to pass on up to £5 million in farm assets between them without incurring additional inheritance tax.

The government estimates that approximately 85% of estates claiming agricultural property relief in the 2026–27 tax year, including those also claiming business property relief, will see no increase in inheritance tax liabilities as a result of the changes.

Farmers Welcome Policy Reversal

The original proposal, announced in 2024, ended a long-standing inheritance tax exemption for agricultural families and sparked widespread backlash. Tractor-led protests in London have taken place regularly since the announcement.

Tom Bradshaw, president of the National Farmers Union, welcomed the government’s decision, calling the initial plan a “pernicious and cruel tax.”

“I am thankful common sense has prevailed and government has listened,” Bradshaw said.

“From the start the government said it wanted to protect the family farm, and today’s announcement brings that much closer to reality for many.”

Another U-Turn for the Starmer Government

The move marks the latest policy reversal by Prime Minister Keir Starmer’s government. In recent months, it has also backed away from proposed cuts to welfare spending and scaled back plans to reduce energy bill subsidies for older people.

Initially, the government argued the inheritance tax reform was necessary to raise funds for overstretched public services. Farmers, however, warned it would threaten the survival of family farms and reduce domestic food production.

With the revised measures, the government hopes to strike a balance between fiscal responsibility and protecting Britain’s agricultural sector.