As the post-Budget scrutiny gets underway, there is one group of obvious losers from today’s statement: farmers. The rural community is up in arms about Rachel Reeves’ changes to tax relief on farmland. From April 2026 this will be capped at 50 per cent for assets over £1 million – which works out at around roughly 67 acres. The average UK farm size is 217 acres, meaning the vast majority of ordinary family farms will now have to pay inheritance tax. Farms with amenity value or higher local land prices – such as those in the South of England – will be particularly impacted.
Rural MPs from across the House are already starting to receive correspondence from farming constituents, fearful and angry about the consequences of this change. One Tory with a big rural presence warns that ‘it will single-handedly kill the family farm’. Another says that some constituents have got in touch to say they ‘will have to now consider selling up’. A third MP from one of the minor parties suggests that ‘Eighty per cent of farms are smaller than 250 acres – they are going to be worth more than £1 million but not sufficiently enough to be able to carry the inheritance tax.’
The farming community has reacted with near-unanimous fury. The National Farmers’ Union (NFU) has called it ‘a disastrous Budget for family farmers’; the Countryside Alliance note how ‘young farmers taking over their parents’ farms already face significant challenges breaking even.’ The Country Land and Business Association (CLA) – whose former president is the father of Labour MP Henry Tufnell – says ‘its decision to now rip the rug from under farmers is nothing short of a betrayal.’ It suggests that around 70,000 farms could be affected by the change.
Changing tax relief on farmland is a proposal that has been floating around the Treasury for years. Tory ministers previously concluding that a very high threshold would be needed to prevent the kind of headlines we are seeing today; in such circumstances the sums raised would be so little as to be meaningless. The strength of feeling can be summarised by TV star Jeremy Clarkson who tweeted shortly after the announcement: ‘Farmers. I know that you have been shafted today. But please don’t despair. Just look after yourselves for five short years and this shower will be gone.’ His fellow celebrity Kirstie Allsopp – a resident of rural Devon – was blunter still:
Rachel Reeves had fucked all farmers, she has destroyed their ability to pass farms on to their children, and broken the future of all our great estates, it is an appalling decisions which shows the government has ZERO understanding of the what matters to rural voters.
Compounding the news on higher taxes is the double whammy that spending on farmers is set to decline. Defra – the Department for Environment, Food and Rural Affairs – is a loser in the spending round, as one of the seven Whitehall departments who will experience a drop in real terms expenditure next year. This is despite successive cuts in the department’s budget over the past decade. While the funding pot for UK agriculture remained consistent over the last parliament, inflation has seen a 44 per cent increase in farm costs between 2019 and 2024.
Defra Secretary Steve Reed’s line is that farmers will have to ‘learn to do more with less.’ It will offer little comfort to those in rural areas tonight, many of whom voted for a Labour MP in July for the first time. Keir Starmer made great efforts to win back these places where his party had polled so poorly between 2005 and 2019, telling the NFU in 2023 that ‘losing a farm is not like losing any other business – it can’t come back.’
More than 100 Labour MPs were elected for rural areas in July. They include the likes of Tufnell in Pembrokeshire, Jenny Riddell-Carpenter in Norfolk and Michelle Welsh in Sherwood Forest. If they are all to be returned to parliament in five years’ time then they will have to hope that today’s pain is worth it in the long term.
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