Partial U-turn on 20% Inheritance Tax for Farms Announced Ahead of MPs' Return
A partial U-turn on the 20% inheritance tax for farms is set to take effect from next April, with about half of the affected farms now expected to be exempt from the charge. This policy reversal follows 14 months of sustained farmer protests and efforts by the National Farmers' Union (NFU) to seek concessions rather than complete abolition.
The decision's timing appears linked to increased rural representation within the Labour Party and pressures from backbench MPs, where more than 30 Labour members abstained and only one voted against the policy. Some Labour MPs privately pushed for concessions, and ministerial discussions became more positive in the month leading up to the announcement, although ministers were reportedly not informed in advance.
Keir Starmer's recent appearance before the liaison committee, during which he faced cross-party questioning about the policy’s potential to cause personal tragedies, added to the political pressure for a shift in approach. Downing Street aims to frame the policy reversal as a proactive response to concerns ahead of MPs' return in January; however, Conservative members have criticized the move, describing it as being released during parliamentary recess.
The cost of this policy reversal is estimated at around £130 million, a relatively small portion of the approximately £900 billion annual tax revenue. This change reflects a broader pattern where revenue-raising measures initially provoke backlash, leading to partial reversals before political considerations ultimately influence final decisions—similar to previous cases involving winter fuel payments and welfare reforms.
