Farmers have issued a stark warning that Rachel Reeves's recent tax reforms could adversely affect approximately 75% of British food production, potentially leading to increased prices for consumers.
The Chancellor's decision to cap agricultural property relief at £1 million means that farms exceeding this value will now be subject to inheritance tax. This change is set to take effect from April 2026.
The National Farmers' Union (NFU) has expressed significant concern over the implications of this policy. Tom Bradshaw, the NFU's deputy president, stated: "This Budget not only threatens family farms but also makes producing food more expensive, which means more cost for farmers who simply cannot absorb it and it will have to be passed up the supply chain or risk the resilience of our food production."
Under the new regulations, agricultural estates valued above £1 million will face a 20% tax on the excess amount, as they will only receive 50% relief on the portion exceeding the threshold. The government maintains that this measure is designed to target wealthier estates, asserting that three-quarters of farms will remain unaffected. However, industry experts argue that the policy could have far-reaching consequences.
Nigel Jenney, Chief Executive of the Fresh Produce Consortium (FPC), remarked: "How are we supposed to support struggling consumers and strengthen our own home-grown production under these conditions? The Chancellor's decision has put a stranglehold on our industry"
Sean McCann, a chartered financial planner at NFU Mutual, commented: "Agricultural property relief is in place to protect British agriculture and ensure family farms are not broken up when they’re passed on to the next generation. These changes mean in many cases we could see land and buildings being sold on the farmer’s death to pay the tax bill, with the next generation of farmers inheriting smaller, less efficient farms as a result."
The NFU has also highlighted the potential impact on the nation's food security. Mr Bradshaw added: "This Budget not only threatens family farms but also makes producing food more expensive, which means more cost for farmers who simply cannot absorb it and it will have to be passed up the supply chain or risk the resilience of our food production."
In response to these concerns, a government spokesperson stated: "The changes to agricultural property relief are designed to ensure that the wealthiest estates contribute their fair share, while protecting the vast majority of family farms. We remain committed to supporting British agriculture and ensuring the long-term sustainability of our food supply."
As the April 2026 implementation date approaches, farmers and industry bodies are calling for further dialogue with the government to address the potential challenges posed by the new tax measures.
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