Steve Reed claims small family farmers “won’t be affected” by IHT changes
4th November 2024
The Defra secretary of state has claimed headlines over the changes to IHT are “misleading” following major backlash.
Responding to a fierce backlash from farmers on changes to inheritance tax (IHT) reliefs, Defra secretary of state Steve Reed has insisted only the “richest” estates will have to pay.
Last week’s Autumn Budget revealed agricultural property relief will be capped at £1 million, with 50% relief applying thereafter, effectively a 20% tax on assets over £1m.
The move has prompted serious concern about succession among farmers, with a protest in London planned for 19th November.
Despite assurances that small family farms will not be affected, the AHDB has said the average farm holding value is £2.2m, which would incur a £240,000 inheritance tax.
The Country Land and Business Association has estimated that 70,000 farms would fall into the scope of the tax.
Fact checking by the BBC shows various sources suggest 30-35% of UK farms could be valued at over £1m. As there are around 209,000 farm holdings in the UK, this gives an estimate of between 62,700 and 73,150 farms.
The Treasury has estimated that 500 farms a year will be affected.
Steve Reed defends Budget
Writing in The Telegraph, Steve Reed blamed the Tory government for leaving the country “in a mess” with a £22 billion black hole in its finances.
He wrote: “I completely understand farmers’ anxiety at any changes.
“But rural communities need a better NHS, affordable housing and public transport we can provide if we make the system fairer. […]
“Only the richest estates will be asked to pay – not small, family farms as some misleading headlines have claimed.
“Look at the detail and you’ll see that the vast majority of farmers will not be affected at all.
“They will be able to pass the family farm down to their children just as previous generations have always done.”
READ MORE: Chancellor announces “hammer blow” reforms to agricultural property relief
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READ MORE: Farmers will rally in London to show their anger with devastating impact of Budget
Mr Reed is set to meet the NFU today (4th November) to discuss its concerns.
“Still a generous regime” – No 10
Downing Street has also dismissed concerns over the changes, with a spokeswoman telling reporters that three quarters of farms would be unaffected.
She claimed the taxation was “still a generous regime” for farmers and the changes address “cases where we’ve seen people buying up land not for farming and exploiting a loophole”.
Jeremy Clarkson has hit back at the changes, saying British farmers have been “shafted”.
Meanwhile the NFU has said the tax “must be reversed”.
President Tom Bradshaw said: “The Treasury’s figures which claim this will only affect one in four British farms are misleading.
“The £1 million 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.
“The asset value of genuine food-producing farms will be high, given the size they need to be to remain viable businesses; but that’s the value of the asset, it doesn’t reflect its profitability which is often, and increasingly so, very low.”
The mass lobby for NFU members will take place on Tuesday, 19th November, at Church House, London.
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