Cabinet minister slams rich for 'farmland tax dodge' as thousands of farmers protest in London

A Cabinet minister claimed swathes of farmland in Britain are being used by the wealthy to dodge inheritance tax.

As thousands of farmers were protesting in London, Environment Secretary Steve Reed went on the offensive in defending reforms to the levy.

He tweeted: “Half of farmland sold last year went to non-farmers including wealthy individuals trying to avoid inheritance tax.

“It’s right that tax changes will ensure everyone pays their fair share - and young farmers can realise their dream of buying their own farm.”

Half of farmland sold last year went to non-farmers including wealthy individuals trying to avoid inheritance tax.

It's right that tax changes will ensure everyone pays their fair share - and young farmers can realise their dream of buying their own farm.https://t.co/5nLp0ojHEA

— Steve Reed MP (@SteveReedMP) November 19, 2024

The Labour Government clashed furiously with farmers’ leaders over how many farms will be affected by the changes to inheritance tax.

Thousands of farmers were protesting outside Parliament on Tuesday, with hundreds of police officers on duty in case tempers boil over into public disorder.

Tom Bradshaw, president of the National Farmers’ Union, accused Streatham and Croydon North MP Mr Reed of treating the farming industry with “contempt”.

Shadow levelling-up secretary Kevin Hollinrake, Tory MP for Malton and Thirsk, accused Mr Reed of being “out of touch” with the countryside.

Only “the very wealthiest farmers” affected, says Farming Secretary @SteveReedMP - this shows just how out of touch you are pic.twitter.com/A9HhQfjhN4

— Kevin Hollinrake MP (@kevinhollinrake) November 19, 2024

Asked how many farmers will be hit by the changes to inheritance tax, Mr Bradshaw told LBC Radio: “There’s huge mistrust in the numbers, even Defra and the Treasury can’t agree on the number.

“Our numbers suggest that 75% of commercial farms, those farms producing this country’s food, are caught in the eye of this storm.”

On the seven-year gifting rule, Mr Bradshaw said the farmers in the “twilight of their careers” who may not expect to live for that amount of time “have been cut off at the knees”.

Previously, farming businesses qualified for 100% relief on inheritance tax on agricultural property and business property.

But now the tax is being imposed on farms worth more than £1 million, with an effective tax rate of 20% on assets above the threshold, rather than the normal 40% rate for inheritance tax.

The Government quotes figures showed that the 7% of wealthiest estates account for 40% of the total value of agricultural property relief (APR), costing the taxpayer £219 million.

According to the Treasury, some 27% of estates claiming APR were above the £1 million threshold in 2021/2022, suggesting that nearly three-quarters of farms would not fall within the scope of the charges.

The Treasury says around 500 estates a year are expected to pay inheritance tax under the changes.

However, the NFU says farm businesses have also qualified separately for business property relief, which can cover things such as harvested grain and livestock, machinery and diversified businesses such as camping on a farmer’s field.

Now the two are combined, with a single £1 million allowance before inheritance tax is levied, which could mean more farms are in scope.

The NFU points to figures from the Environment Department showing that 66% of farm businesses in England have a net value of more than £1 million.

But the Government has countered that analysis, saying that looking at asset value alone does not necessarily mean the farm will be affected, as it depends on individual circumstances.