Government Announces Partial Reversal on 20% Inheritance Tax on Farms Amid Protests and NFU Diplomacy
The government has announced a partial U-turn on the planned 20% inheritance tax on farms, exempting about half of the affected farms starting next April. This decision came after protests, including tractor convoys, and behind-the-scenes National Farmers' Union (NFU) diplomacy influenced a shift from complete removal to mitigation of the policy.
The political landscape also played a role, with Labour's landslide victory increasing the influence of rural MPs. Notably, more than 30 Labour MPs abstained on the inheritance tax vote, with only one voting against it. The timing of the announcement remains debated: while ministers showed more optimism this month, some MPs were not briefed in advance. Additionally, Labour leader Keir Starmer's recent appearance before the cross-party liaison committee may have influenced the government's decision.
Concerns were raised by some MPs that the policy could cause personal tragedies for farmers, including highlighting suicide as a potential consequence before the tax was set to take effect. Downing Street aims to dispel political tensions before MPs return in January, describing the tax change as a prudent move that does not require parliamentary scrutiny.
The reversal is estimated to cost about £130 million, a fraction of the roughly £900 billion annual tax revenue. Observers have noted a pattern of revenue-raising measures provoking backlash and leading to partial reversals, similar to previous cases involving winter fuel and welfare reform. It is important to note that while the NFU organized mass lobbies of Parliament, it did not organize the noisy tractor protests.
