For more than 100 years, the family of 56-year-old Andrew Smith has had a cattle farm on Bodmin Moor in Cornwall. Smith, who now runs the farm, sees chancellor Rachel Reeves’s changes to inheritance tax rules as a grave betrayal of British farmers.
Working with his three sons, the farm produces about 2,000 sheep and 30 to 40 cows each year, yet makes “no profit”, he says. “We just pay the bills.”
Last Wednesday, Reeves announced that, from April 2026, farms and other business property, which had been passed on to heirs tax-free, will fall within inheritance tax (IHT). Inheritors will have to pay 20% of their value above £1m, half the headline inheritance tax rate of 40%.
“The boys have been in the business with me since they left school,” Smith says. “They have been bred to look after stock on the moors, which is a very difficult terrain to earn a living on. They were expecting to take it over from me, but this is the final nail in the coffin for family farms.”
“Once my sons are gone, you can’t replace them, nobody else will have the experience on these hills, the food will just not get produced. It’s the end of the line.”
Smith believes that the fact that UK family farming today is by default asset-rich but cash-poor has been entirely ignored by the chancellor’s new rules.
“If my farm is worth £5m, my sons won’t be able to pay £800,000 in inheritance tax, of course, they’ll just have to sell half their land when I die. Then the farm will be unviable. Starmer has 100% broken a promise; they lied.”
Smith is one of scores of farmers who responded to a Guardian callout asking about the planned changes. They raised concerns that Labour’s policy will harm family farms, force them to stop food production, prevent investment in new technologies and break the chain between farming generations.
Many said the policy would mean selling off land to larger, corporate agricultural businesses, or investors with limited interest in environmental concerns or communities and who would probably, as one farmer put it, “simply watch balance sheets”.
The National Farmers’ Union has labelled the plans “disastrous” for the industry. The government said the change will only affect about 2,000 estates a year.
‘Why do we bother to produce food?’
Jonathan Bell’s family has been involved with farming going back at least to his great-grandfather. In 2018, he began running the 250-acre Devon farm in partnership with his wife and parents.
“Rachel Reeves has destroyed our farm business and also our cold-pressed rapeseed oil business,” says Bell, 55.
Bell estimates that the family could face a £400,000 inheritance tax bill. “On a business making £30,000 profit, there is no way I could service a debt of that magnitude,” he says. “We would have to sell part of the farm, making us even more uneconomical,” raising the “very sad” possibility of being forced to give up farming entirely.
“We work in one of the most dangerous professions in the country to produce food to feed everyone,” he says.
Bell says the changes hurt because farming is as much a service for the nation as an industry. “We look after the countryside and provide the food to keep people alive,” Bell says. If this is how the government treats farmers, he feels, “Why do we bother to produce food?”
‘Good in principle, but the threshold is too low’
Andrew Brown, from Rutland in the East Midlands, owns about 100 acres of land, but he is mainly a tenant farmer producing wheat.
He feels more ambivalent about Reeves’s new rules. “I think this is ultimately a good idea, because some of the very, very rich landowners aren’t farmers, they’re people who just bought land to take advantage of the IHT rules.
“So, if this stops very wealthy people from buying farmland to avoid taxes, then all the better, as those people could afford to pay the tax anyway,” he says.
“I don’t disagree with the principle, but there were better ways of doing it. The threshold is too low, which will affect a lot of people, and it should be gradual, so 5%, say, for up to [a farm value of] £5m, then 10% until £10m, and so on, to a maximum inheritance tax rate of 50% for farms worth over £50m. That would have been fairer.”
‘If you sell the farm, you lose the home as well’
When Gerallt Lloyd was growing up on his parents’ dairy, sheep and beef farm near Aberystwyth, he remembers pouring out fresh cups of cow’s milk to drink.
Decades later, Lloyd, now 47, still works for his 77-year-old father on the same land in west Wales, and hoped one day to pass it on to his children, aged 17 and 14. He owns 120 acres, but in addition rents 150, which he says “helps to make the farm viable”.
But Lloyd fears the chancellor’s decision to change agricultural property relief will mean his children will be deprived of that opportunity.
“It feels awful,” says Lloyd, who estimates being hit with a tax bill of about £100,000 when he takes over from his father. “This could be the death knell for many family farms.”
Lloyd says it’s “a pity they’ve put this threshold at such a low point. I know £1m sounds like a lot,” but the proposals will mostly hit small farms and should have targeted assets upwards of £3m or £5m, he says.
The prospect for Lloyd, he says, is potentially selling parcels of the land he grew up on to account for the tax bills. “And farming is different to many other businesses, it’s also a home,” says Lloyd, whose wife and parents live on the farm. “They’re not big or expensive houses, but they’re a roof over our heads. If you have to sell the farm, or part of it, you lose the home as well.”
