Government Raises Inheritance Tax Threshold for Farmland After Backlash
The inheritance tax threshold for inherited farmland has been raised from £1 million to £2.5 million, a change that will take effect from April. This adjustment reduces the number of estates affected next year from 375 to 185. Married couples with estates up to £5 million will be able to combine two £2.5 million allowances, allowing them to avoid inheritance tax on farming assets.
The policy change, originally announced in Rachel Reeves's budget last year, came after protests and campaign pressure. The government stated it listened to concerns and aims to protect family farms while maintaining relief for valuable assets. However, critics have branded the change a "family farm tax."
The response from farming stakeholders has been largely supportive. National Farmers' Union president Tom Bradshaw and the Labour Rural Research Group both welcomed the change. Labour leader Keir Starmer acknowledged disturbing reports of farmers with terminal illness planning to take their own lives to avoid the tax. Meanwhile, Markus Campbell-Savours faced suspension from Labour for voting against the tax.
The government announced the U-turn on the tax threshold just before Christmas, emphasizing their commitment to supporting family farms in the face of public concern.
