Bid to melt change rejected by Treasury | EUROtoday

A bid by the division for rural affairs to melt modifications to inheritance tax for farms – presumably by exempting some older farmers – has been rejected by the Treasury.

The Treasury stated there can be no change or mitigations to the coverage, which can see an finish to inheritance tax exemption for some farms.

From April 2026, farms value greater than £1m will face an efficient inheritance tax charge of 20% – half the same old charge of 40%.

BBC Newsnight understands that the Department for Environment, Food and Rural Affairs (Defra), which represents the pursuits of farmers in authorities, believes it was not correctly consulted over the change.

The division was knowledgeable in regards to the coverage the night time earlier than it was introduced within the Budget.

The transfer has been branded “disastrous” by the National Farmers’ Union (NFU)with some farmers warning it could decimate the countryside.

Defra steered softening the coverage to exempt some older individuals, presumably these over the age of 80.

The April 2026 begin for the coverage means they could not have time to utilize present guidelines to skip inheritance tax by passing on an asset seven years earlier than loss of life.

But this suggestion has been dismissed by the Treasury, which stated it had taken “a fair and balanced approach”.

Since its introduction in 1984, agricultural property reduction (APR) has allowed small household farms – together with land used for crops or rearing animals, in addition to farm buildings, cottages and homes – to be exempt from inheritance tax.

The Treasury stated 40% of APR had been going to “the 7% wealthiest claimants”, and that it had “made a difficult decision to ensure the relief is fiscally sustainable”.

It put this towards a backdrop of “public services crumbling [and] a £22bn fiscal hole inherited from the previous government”.

“Around 500 claims each year will be impacted and farm-owning couples can pass on up to £3m without paying any inheritance tax – this is a fair and balanced approach,” a spokesperson added.

There are divisions in government over the change.

Some ministers believe it will only have an impact on relatively wealthy farmers – a couple using all their inheritance tax benefits will be able to pass on a £3m farm tax free. Any inheritance tax charge on farms can be paid over 10 years.

But other ministers believe the chancellor is in danger of undermining Labour’s relations with rural Britain while raising a relatively small amount of money.

The change could raise around £560m.

Some sources in government have expressed concerns that the chancellor is creating unnecessary grief over a change that is not, in relative terms, a huge money spinner.

There are concerns that the change – which has proved controversial among farmers since its announcement – could become “totemic” in rural Britain.

The NFU warned it could “snatch away the next generation’s ability to carry on producing British food” and see farmers pressured to promote land to pay the tax.

A rally to protest towards the plan shall be held in Whitehall subsequent Tuesday.

There can be a dispute across the figures used to calculate the modifications.

Farmers’ leaders have been instructed by Defra that the figures come from the Treasury and never their division.

Tom Bradshaw, the president of the NFU, stated that Defra figures confirmed the modifications would have an effect on 66% of estates.

The Treasury stated the determine was 28%.

Clive Bailey, founding father of the Farming Forum which can be organising a protest in central London subsequent week, stated on Thursday that any change to the brand new guidelines “would be a step forward”.

Mr Bailey, who farms in Staffordshire, stated the steered exemption ought to cowl individuals a lot youthful than 80.

Compared with the broader inhabitants, farming sees “a lot of people who should have retired already still working”, he told BBC Radio 4’s Today programme.

He called the inheritance rules “so poorly thought out”.

The cost of running a viable farm exceeded £1m, he said, arguing that the government needed to sit down “with actual household farmers or agricultural economists”.

“We’re not special, but the economic circumstances of farming are very different to other industries.”

During rural affairs questions in the Commons, Conservative shadow environment minister Robbie Moore accused the government of “arrogance” and urged ministers to publish a full impact assessment of the change.

Environment minister Daniel Zeichner reiterated the government’s figures that fewer than 500 farms a year would be affected.

He added there were ways the change could “be managed” and called on Conservatives to “join me in reassuring British farmers about their future”.

Another Tory MP, former cabinet minister Sir Jeremy Wright, asked if ministers had considered limiting inheritance tax exemptions to those who could prove a farm had been in family ownership for “a certain number of years”.

Zeichner replied that the issue was “complicated”, adding “in future we will have further discussions”.

Lib Dem environment spokesman Tim Farron said the tax rise would be a “disaster for family farms”.

“Rather than blocking pleas from Defra to rethink, the chancellor must urgently meet with the farming community and NFU to better understand their heartfelt concerns and reverse the tax hike”.

A Defra spokesperson said: “With public services crumbling and a £22bn fiscal hole inherited from the previous government, we have made the difficult decision to reform Agricultural Property Relief in a balanced and fair way.

“All ministers support the policy and it will not change.”