Government Reveals Watered-Down Farm Inheritance Tax Plan

By John Pranay (Editor)

A UK government plan to tax inherited farmland has been watered down, with the threshold for taxation raised from £1 million to £2.5 million. The change aims to protect more family farms from inheritance tax, but critics argue it does not go far enough. The revised policy will see inherited agricultural assets above the threshold taxed at 20% from April 2026.

The government's decision to raise the threshold was met with a mixed response from farming groups and politicians. Environment Secretary Emma Reynolds announced the change, stating that ministers had "listened closely to farmers" and that the new threshold would "protect more ordinary family farms" while ensuring larger estates "contribute more." The National Farmers' Union welcomed the move, saying it removed many family farms "from the eye of a pernicious storm." However, the Country Land and Business Association expressed concerns that the announcement only limits the damage and does not eradicate the issue.

• 2024 Autumn Budget: The government announces plans to reduce inheritance tax relief on agricultural properties and businesses worth over £1 million to 50%.

• 26 November 2025: Farmers stage a protest in Westminster against the proposed changes.

• 23 December 2025: The government announces a climbdown, raising the threshold for taxation to £2.5 million.

This is not the first time the government has faced opposition over its inheritance tax plans. In 2022, a similar proposal was met with fierce resistance from farming groups, who argued that it would force many family farms to sell off assets to pay inheritance tax bills. The government eventually dropped the plan, but the issue has remained a contentious topic.

The government's decision to raise the threshold for taxation on inherited farmland has significant implications for the UK's agricultural sector. The revised policy aims to protect more family farms from inheritance tax, but critics argue that it does not go far enough. The issue highlights the ongoing challenges faced by farmers and the need for a more nuanced approach to inheritance tax.

The government's decision to raise the threshold for taxation on inherited farmland is a significant development in the ongoing debate over inheritance tax. The move is likely to be welcomed by many farmers, but

This U-turn is a significant step forward, but it also highlights the complexities of inheritance tax policy. The government's decision to raise the threshold for taxation on inherited farmland is a tacit acknowledgment that the original plan was flawed. Crucially, this overlooks the fact that many family businesses will still sit above the threshold yet operate on tiny margins. This suggests that the government needs to take a more nuanced approach to inheritance tax, one that takes into account the unique challenges faced by farmers and family businesses.

Assessment: Bullish.

1. Inheritance tax climbdown as agricultural property relief threshold raised — https://moneyweek.com/personal-finance/inheritance-tax/inheritance-tax-farmers-climbdown-agricultural-property-relief-threshold-raised

2. 'Only limits the damage - it doesn't eradicate it' - government waters down inheritance tax plan for farms but concerns remain — https://www.racingpost.com/bloodstock/news/only-limits-the-damage-it-doesnt-eradicate-it-government-waters-down-inheritance-tax-plan-for-farms-but-concerns-remain-ao36B4O3Qlj9/

3. Farm inheritance tax plan 'U-turn' welcomed by Robbie Moore — https://www.thetelegraphandargus.co.uk/news/25720375.farm-inheritance-tax-plan-u-turn-welcomed-robbie-moore/

Methodology: This analysis combines real-time data aggregation from manually selected global sources with advanced AI synthesis, engineered to provide neutral and data-driven insights.