Government Raises Inherited Farmland Tax Threshold in 2024 Budget Concession
The UK government has raised the threshold for inherited farmland tax from £1 million to £2.5 million, allowing couples to pass on up to £5 million tax-free. For assets above this threshold, a 50% relief will apply to the remaining assets. This announcement came after MPs had left Parliament for the Christmas recess.
Environment Secretary Emma Reynolds stated that the changes protect ordinary family farms. As a result, the number of estates liable for higher inheritance tax in 2026/27 is expected to decrease from around 2,000 to approximately 1,100.
The National Farmers Union (NFU) welcomed the change, and the Country Land and Business Association (CLA) credited the government for the concession. However, ongoing concerns remain that some family businesses still face a tax burden.
Political reactions varied: Labour backbenchers abstained on the vote; Markus Campbell-Savours voted against and was suspended, now sitting as an independent; John Whitby described the climbdown as fantastic while a Labour source called the timing bizarre. Conservative leader Kemi Badenoch said the fight is not finished. Liberal Democrat Tim Farron called the change unacceptable, and Reform UK leader Richard Tice criticized the policy and urged full abolition.
The 2024 Budget had originally proposed a 20% tax on inherited agricultural assets above £1 million from April 2026, ending the 100% relief. The concession raises the threshold to £2.5 million.
The government stated that changing thresholds would cost about £130 million but there are no plans to scrap the policy. The principle of reform remains, with the view that the wealthiest estates should pay their share while smaller farms receive support.
