Government Announces Partial U-turn on 20% Farm Inheritance Tax
The government has announced a partial reversal on the controversial 20% farm inheritance tax, exempting about half of affected farms from the policy starting next April. This decision follows significant protests and lobbying efforts led by the National Farmers’ Union, which pressured the government to soften rather than fully scrap the measure.
Internal Labour Party dynamics played a role, with rural MPs pushing for concessions; notably, more than 30 abstained on the inheritance tax vote and only one opposed it. The timing and rationale behind the announcement remain unclear. Some ministers reportedly held positive views during talks, and the announcement came without prior notice. Observers cite Sir Keir Starmer’s recent appearance before the liaison committee and related questioning as a possible factor influencing the timing.
Downing Street aims to present this policy reversal before MPs return in January to counter ongoing protests and negative headlines. Conservative officials indicated the change was quietly introduced during the MPs’ recess. Despite holding a large majority, the government faces questions over its political judgment in handling the matter.
Financially, the policy change is estimated to cost around £130 million, a minor amount compared to the roughly £900 billion annual tax revenue, leaving questions about its overall impact on government finances. Analysts note a pattern of the government introducing revenue-raising policies that provoke backlash and lead to partial reversals, as previously seen with winter fuel payments and welfare reform, now echoed by the farm inheritance tax adjustment.
