The Government has made significant changes to controversial plans to introduce inheritance tax on farmland. Under the changes put forward as part of 2024’s budget, inherited agricultural assets worth more than £1m would have to pay inheritance tax at 20%.
These assets were previously exempt, allowing farms to stay in families without costly tax bills when they were passed down. The changes were due to come in next year, but the Government has now confirmed that the threshold will rise from £1 million to £2.5 million per person.
It means married couples or civil partners will be able to pass down a total of £5 million without incurring additional costs. The proposals had provoked outrage among many farmers, with protests seen at Hexham Mart and in Morpeth as well as in London.
North Northumberland MP David Smith has previously called on the government to look again at the policy amid fears it could force families to sell off chunks of land to pay the tax. The Labour MP said the change represented a “significant boost” for family farms.
David Smith comment
“This is welcome news for farming families and rural communities from Wooler to Seahouses and from Norham to Widdrington. I’ve been advocating hard alongside other rural colleagues to press the Treasury for these vital changes.
“I am pleased that our concerns about rising land values, farm succession and the profitability of farming have been listened to. Raising the threshold to £2.5 million per person – and £5 million for couples – will make a real and practical difference, helping to protect family farms and give greater certainty for the future.
“Farming has faced so many challenges for many years, and yet it is central to our rural economy and to food production across the UK. I’m also pleased to see the changes being welcomed by the NFU, and they will help provide stability for rural businesses and support long-term investment and stewardship of the countryside.”
Mr Smith has also said he will continue to engage with farmers, rural organisations, and local stakeholders to ensure that farming has “all the support that it needs to become profitable and sustainable for the long-term”.
Northumberland County Council’s Conservative Coun Mark Mather, who farms near Wooler, said farmers would need to see more detail on the new proposals.
He said: “This is a bit of positive news, it is a step in the right direction. The people I have spoken to so far say it is a positive, but they want to see the detail.
“The trust of the rural people has gone for this Government, the trust is already broken. Everybody is sceptical.
“We need to see the detail first and make sure it goes far enough. The headline is a positive one.
“There has been a lot of campaigning so I would like to thank the public for their support on this. We need to get the policy writers understanding what damage they have done to rural areas.”
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