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The government has affirmed that there will be no further revisions to its revised plans concerning the increase of farm inheritance tax.
Protestors disrupted a speech delivered by Environment Secretary Emma Reynolds at the Oxford Farming Conference on Thursday, staging a tractor demonstration accompanied by horn-blowing.
Last month, the government announced that the planned threshold for a 20% tax on inherited agricultural assets would be elevated from £1 million to £2.5 million.
In response to inquiries about potential additional modifications, Reynolds stated at the conference: “That’s it, I’m afraid… it is the people in this room who have engaged with us constructively and relatively quietly that have had an influence on this process, not the people sounding their horns.”
Critics have interpreted the increase in the tax threshold as a concession following months of opposition to the initial proposals, which were unveiled in Chancellor Rachel Reeves’ inaugural budget in 2024.
However, Reynolds informed the conference that the government had been attentive to farmers, who “aren’t shy about coming forward and giving you their views,” and had consequently “significantly increased” the tax threshold, set to take effect in April.
The government’s original proposals stipulated a 20% tax on inherited agricultural assets exceeding £1 million, half the standard inheritance tax rate, projected to generate an estimated £520 million annually by 2029.
The government had contended that the adjustment would safeguard smaller farms while preventing affluent investors from exploiting farmland as a tax loophole.
However, in December, the government retreated from its original stance, raising the threshold to £2.5 million.
In conjunction with an exemption allowing farmers to transfer assets to their spouses tax-free, the revised policy enables couples to bequeath up to £5 million in qualifying assets without incurring tax liabilities.
Nevertheless, the Country Land and Business Association (CLA), representing rural land and business owners in England and Wales, has vowed to persist in its campaign to “reverse the policy in full.”
CLA President Gavin Lane characterized the government’s “partial climbdown” in December as a “welcome relief” but emphasized that it “was a further acknowledgement that their reforms were ill-thought through and deeply damaging.”
Lane asserted that the remaining policy “is still so dreadful for the rural economy.”
The National Farmers’ Union (NFU) has maintained its principled opposition to the tax and pledged to “push for further changes at the next political opportunity.”
Nonetheless, President Tom Bradshaw acknowledged: “News of the change to the inheritance tax threshold just two days before Christmas, and days after my meeting with the Prime Minister, has been a huge relief for many farming families across the country.”
“The change removes the tax burden from a significant number of family farms,” he added.
The Environment Secretary also assured that there would be “no more sudden, unexpected closures” of farming payment schemes, as she detailed reforms to the Sustainable Farming Incentive (SFI), the flagship environmental program for England.
In March, the SFI, which compensates farmers in England for “public goods” such as insecticide-free farming, wildflower strips, and hedgerow management, was abruptly suspended due to the depletion of allocated funding for the year.
At the time, the NFU described the closure as “another shattering blow to English farms”.
Since then, there has been ongoing uncertainty surrounding the program, a pivotal component of the Environmental Land Management Schemes (ELMS) that superseded agricultural subsidies following Brexit.
A farming profitability review conducted by former NFU President Baroness Minette Batters, commissioned by the government, cautioned late last year that the sector was “bewildered and frightened”, with alterations to inheritance tax and SFI payments causing significant ongoing concern.
On Thursday, Reynolds outlined plans for what she characterized as a “simpler, fairer and more stable” scheme, acknowledging that “mistakes were made” concerning payments in the past.
She indicated that the initial application window for the new scheme would open in June, targeting small farms under 50 hectares (120 acres) and those not currently enrolled in a payment scheme. A second, broader application window would open in September for all farms.
She affirmed the overall strategy of utilizing agricultural payments to incentivize environmental benefits, stating to farmers at the conference: “Protecting the environmental foundations of farming isn’t separate from profitability, it’s essential to it.”
Reynolds also mentioned that the government was considering adjustments, including streamlining the number of nature-friendly farming initiatives funded, limiting the amount of land eligible for an action, and potentially capping the total amount of money a farm business could receive for SFI.
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