U-turn on farm inheritance tax is a ‘real relief’ for North Devon farmers

The Government has revised its plans to cap tax relief for passing on farms to the next generation, it was announced today (Tuesday, December 23).

The ‘family farm tax’ due to be implemented in April would have seen a cap of £1million on agricultural and business property relief for inheritance tax, meaning families would have been taxed on all assets beyond that when the estate was passed on when the owner died.

Now the Treasury has announced the threshold before people are taxed will be increased to £2.5m. It also allows spouses or civil partners to pass on up to £5m in qualifying agricultural or business assets between them before paying inheritance tax, on top of existing allowances.

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The original plans sparked months of high profile protests, including rallies and tractors in central London.

Farming families argued that even smaller estates would soon surpass the £1m threshold once the value of property, land and machinery assets had been taken into account, regardless of whether the farm was even profitable.

The Government has said the number of estates that would have been affected by the reforms in 2026-27 had halved from 375 to 185.

Speaking today, North Devon MP Ian Roome welcomed the reversal, saying: “The Government's concession on the ‘family farm tax’ will be a real relief for many family farms in North Devon and it should help protect the smallest farms first. From the start, we Liberal Democrats have fought against this policy that risked forcing families to sell up or shut their farm gates for good.

“It isn’t the full reversal we have been calling for and farmers shouldn't have been put through over a year of uncertainty since the Government first announced these changes. But it is a welcome step in the right direction.

“I'll continue to push the government to scrap the tax in full, and I want to thank everyone who has written, met with me, shared figures and kept the pressure on.”

Above: North Devon MP Ian Roome at a farming rally in London on Budget day.

Councillor Cheryl Cottle-Hunkin, who is a farmer and the Devon County councillor for Torrington rural as well as cabinet member for rural affairs, hailed the news a very welcome concession and said it was ‘a significant win’ for farmers and rural communities across Devon.

She added: “Under the original proposals, many family farms here would have faced being financially crippled. Farmers and their families have faced more than a year of serious stress and anxiety.

“I have been campaigning on this issue since the day it was announced, making it clear to ministers the serious impact it would have on Devon. Not just the farming families themselves but the wider effect on the rural economy and the communities they sustain.

“This change by central government did not happen by accident. It follows months of determined effort from farmers and supporters across the country - from tractor protests, to petitions, letters and meetings with MPs. Every voice mattered and that collective pressure has made a real difference.

“While the Liberal Democrats continue to campaign for a total reversal of these inheritance tax changes, this concession is nonetheless welcome.

“It provides much-needed reassurance for many as we head towards Christmas, but there is more to do. I will continue to fight to ensure Devon’s farmers and rural communities are properly heard and supported in the year ahead.”

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After today’s announcement, Environment Secretary Emma Reynolds said: “We have listened closely to farmers across the country and we are making changes today to protect more ordinary family farms.

“We are increasing the individual threshold from £1m to £2.5m which means couples with estates of up to £5m will now pay no inheritance tax on their estates.

“It’s only right that larger estates contribute more, while we back the farms and trading businesses that are the backbone of Britain’s rural communities.”