Rachel Reeves’ adjustments to agricultural inheritance tax may result in meals value rises and could have a “catastrophic” affect on household farms, farmers have warned.
The chancellor introduced in Wednesday’s finances inheritance tax of fifty%, at an efficient charge of 20%, will likely be imposed on farms price over £1m, the place beforehand they have been exempt.
Her announcement has been met with anger from rural communities, with celebrities comparable to Jeremy Clarkson saying farmers “have been shafted”, and Kirstie Allsopp saying the chancellor has “destroyed the flexibility [for farmers] to move farms on to their youngsters”.
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Farmers and the Conservative shadow farming minister have advised Sky Information the plan, which is because of start in April 2026, dangers pushing up meals costs on account of uncertainty and the opportunity of farms having to be bought up so much less meals is produced.
Nationwide Farmers’ Union (NFU) president Tom Bradshaw mentioned the coverage “will snatch away” the subsequent era’s means to supply British meals.
Fourth era Warwickshire farmer Bizza Walters, 26, advised Sky Information she can be compelled to promote a few of her household farm’s 500 acres to pay the £7,500 a month she has estimated she must pay for 10 years if her father and uncles, who personal the farm, died.
“Our margins and prices are so tight and something we make is reinvested, so I might should promote land which might not return into meals manufacturing,” she mentioned.
“They will have to return to their senses as a result of meals costs will go up as a result of we can’t be capable of produce as a lot meals.”
Nation Land and Enterprise Affiliation (CLA) president Victoria Vyvyan advised Sky Information the federal government has “conflated a enterprise asset with private wealth” of their bid to tax the rich.
However she mentioned farms are companies and most run on tight margins with little spare money.
She added a £1m farm would solely be about 100 acres in most UK areas, “which isn’t a viable enterprise proposition”.
The £1m cap may additionally rack up fairly rapidly as it isn’t simply the worth of land, but additionally livestock, farmhouses, sheds and equipment.
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Conservative shadow farming minister Robbie Moore, who’s from a farming background, mentioned the transfer is “catastrophic for household farms”.
“That is successfully thievery, placing two fingers as much as the farming business,” he advised Sky Information as he accused the federal government of failing to grasp how farming works.
“They’ve utterly underestimated the impact it will have, it creates lots of uncertainty when it comes to how that land will likely be managed.
“If you wish to put money into that holding to supply meals, you want certainty, and what the announcement creates is uncertainty.
“It’ll have a direct affect on the meals safety agenda and meals costs additional down the road.
“In the event you’re desirous to work arduous at hand farmland all the way down to the subsequent era, you are utterly disincentivised to do this.”
He reiterated what numerous farmers have been saying: that their land could also be excessive in worth, however they’re battling cashflows, so paying tax to proceed the household enterprise might not be viable for a lot of.
NFU president Mr Bradshaw added: “This finances not solely threatens household farms however may even make producing meals dearer.
“This implies extra price for farmers who merely can’t take up it, and it must be borne by somebody.
“Farmers are all the way down to the bone and gristle, who’s going to hold these prices?”
The federal government says it’s nonetheless dedicated to supporting farmers and “the very important function they play to feed our nation”.
Talking on Thursday, the chancellor described the adjustments as “truthful and proportionate”.
“We wanted to lift cash within the finances yesterday, and we all know that there are lots of landowners who’re very rich, some who purchase land to keep away from paying inheritance tax as a result of beforehand there was no inheritance tax,” she mentioned.
The Division for Setting, Meals and Rural Affairs (DEFRA) has been contacted for remark.