Efra chair hits back at family farm tax in letter to Starmer
24th January 2025
Alistair Carmichael, chair of the Efra Committee, has asked to meet Keir Starmer as a matter of urgency, to discuss the impacts of the family farm tax.
Keir Starmer has been asked to meet the chair of the Efra Committee, Alistair Carmichael, and take a series of steps to mitigate the impact of the ‘family farm tax’.
In a letter to the prime minister, Mr Carmichael noted that concerns over reforms to inheritance tax are fuelling low confidence and morale in the agricultural and rural community.
Mr Carmichael, who is the Liberal Democrat MP for Orkney and Shetland, asked the PM to clarify the reason for the reforms – which will see agricultural property relief cut to 50% for farms over £1m from April 2026.
He said the prime minister himself has claimed the reforms were intended to raise revenue in the Budget and were not aimed at a particular group.
However, secretary of state Steve Reed and Treasury officials told the Efra Committee that the intention was to reduce incentives for the ‘super wealthy’ to buy agricultural land to avoid inheritance tax.
This was also confirmed by minister for food security and rural affairs Daniel Zeichner, in response to an urgent question on 4th November.
Impact has been underestimated
Mr Carmichael said the committee heard ‘compelling evidence’ from tax experts and farming representatives on 11th December, which suggested significantly more farms will be affected than the 500 predicted by the Treasury.
Additionally, the Treasury’s figures only include BPR claims where they were also made by agricultural property relief claimants, resulting in an underestimate of the impact, he added.
‘There are many farmers, including tenants, who have made business property relief only claims.
‘A tenant’s machinery, business and silage are all BPR assets.
‘We have also heard evidence of landlords planning to sell land to pay for inheritance tax and tenant farmers facing eviction as a result of the reforms,’ he wrote.
READ MORE: ‘Highly uncertain’ that IHT changes will raise £500m – OBR report
READ MORE: Conservative councillors urge Steve Reed to back down over IHT
READ MORE: What did Steve Reed announce at the Oxford Farming Conference?
Time to make changes
Mr Carmichael stressed that there is sufficient time between now and April 2026 to adapt the proposals – and said the committee would like to work with the government to achieve its aims.
He also lent his support to the farming unions’ letter to the chancellor on 8th January, which called for an upcoming technical consultation to be extended to cover a number of other issues.
These include: impacts on farming profitability and viability, the effect of the APR/BPR threshold not being transferable between spouses, and the ramifications for older individuals and their ability to mitigate IHT liability.
Additionally, the impact on the tenanted sector, alternative measures and the potential effects across the different nations of the UK.
Mr Carmichael pointed to advice from Dan Neidle, Tax Policy Associates, who suggested protecting farmers with a complete exemption from IHT, subject to an increased cap of £20 million.
He also advises clawing back the exemption if a farmer’s heirs sell the farm.
Strength of feeling
The prime minister was asked to confirm that the Treasury figures do not include BPR-only claims, and to provide the total number of BPR-only claims made in the most recent year for which data is available.
Additionally, he was asked to extend the consultation to include the above issues, and to agree to a meeting as a matter of urgency.
Mr Starmer has been asked to respond by 7th February.
‘I wish to impress on you the strength of feeling on this matter amongst farmers and stakeholders,’ Mr Carmichael wrote.
‘Deep concern is fuelling low confidence and morale levels in the agricultural and wider rural community.
‘As such, I would like to meet with you to discuss potential mitigations.’
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