The changes to inheritance tax announced in last week’s Budget will see agricultural property relief removed, with a new £1m exemption for farmland and then a reduced 20% rate on the balance of the value of the farm.

The move has caused outrage among farmers, particularly among generational farmers who warn it result in the loss of their farms if they are unable to pay their inheritance tax bills, while others warn of the threat of sale of parcels of land to settle tax and a risk to food security in the worse case scenario.

Dubbed the tractor tax, now farmers are planning a march on parliament on 17 November, meeting outside the Houses of Parliament at 11am to demonstrate against the tax hike.  

NFU president Tom Bradshaw said: ‘Farmers and growers have been left reeling from the changes announced in the Budget which demonstrate a fundamental lack of understanding of how the British farming sector is shaped and managed.

‘The current plans to change APR and BPR need to be overturned and fast.

‘Farmers are rightly angry and concerned about their future and for the future of their family farms, having been reassured by minsters in the lead up to the Budget that APR and BPR changes were not on the table.

‘The Treasury’s figures which claim this will only affect one in four British farms are misleading. The £1m cap to APR shows how little this government understands the sector. Very few viable farms would be worth under £1m, but lots of smallholdings and houses with a few acres let for grazing might be.’

Ministers from the Department for Environment, Food and Rural Affairs (Defra) and the Treasury met with NFU president Tom Bradshaw today to discuss the Budget announcements and their impact on farmers, with the government stressing that they would continue to work with the NFU and listen to farmers.

A government spokesperson from Defra told Business & Accountancy Daily: ‘The government’s commitment to our farmers remains steadfast. It’s why we have committed £5bn to the farming budget over two years – more money than ever for sustainable food production.

‘We understand concerns about changes to agricultural property relief and ministers made clear that the vast majority of those claiming relief will not be affected by these changes. They will be able to pass the family farm down to their children just as previous generations have always done.

‘This is a fair and balanced approach that protects the family farm while also fixing the public services that we all rely on. We remain committed to working with the NFU and listening to farmers.’

Changes to inheritance tax for agricultural land carry significant implications. With tax relief on farmland now capped at 50% for assets over £1m, there will be an impact on how farmers transfer assets to future generations with earlier land transfer a possibility.

Mark Chatterton, head of agriculture at Duncan & Toplis, said: ‘The future of British farming is at a critical crossroads. Farmers are already struggling after poor harvests and diminishing subsidies—another financial hit may push many out of the industry for good.

‘Confidence is at an all-time low, with Defra figures showing that nearly half of farmers fear for the future and the NFU revealing that confidence in the sector is at its lowest since records began.

‘The Sustainable Farming Incentive is the last lifeline for many, but even that is only guaranteed for three more years. Without urgent investment, we could see a collapse in agricultural production.’

Since Brexit, farmers have been feeling the pressure from government.

Toby Tallon, tax partner at Evelyn Partners said: ‘Farming in the UK has become even more precarious with the withdrawal of European subsidies. In the meantime, food security, provenance of what goes into the food chain and stewardship of the natural environment have grown in strategic importance.

‘Restricting agricultural property relief, which was introduced in 1984 to protect the agricultural value of land from inheritance tax on death, will leave many agricultural businesses in a precarious situation and facing questions about their futures.’ 

As farmers plan the national day of demonstration on 17 November, Bradshaw underlined how important it was for MPs and the Chancellor to listen to concerns.

‘MPs need to understand the consequences of these actions which is why we are mobilising our members for a mass lobby in the coming weeks. British farmers will ask their MPs to look them in the eye and tell them whether they support this,’ said Bradshaw.

‘There’s still time for the government to accept they’ve got this wrong, and my message to ministers is that they should do the right thing and reverse this awful family farm tax.’

As farmers plan the national day of demonstration on 17 November, Bradshaw underlined how important it was for MPs and the Chancellor to listen to concerns.

‘MPs need to understand the consequences of these actions which is why we are mobilising our members for a mass lobby in the coming weeks. British farmers will ask their MPs to look them in the eye and tell them whether they support this,’ said Bradshaw.

‘There’s still time for the government to accept they’ve got this wrong, and my message to ministers is that they should do the right thing and reverse this awful family farm tax.’

On a more positive note, the government’s New Deal for Farmers is looking to negotiate a new veterinary agreement with the EU to cut red tape at the UK borders to expand British food exports, and has committed to protecting farmers from being undercut by low welfare and low standards in trade deals. It has also introduced a land-use framework designed to balance long-term food security and nature recovery.