Budget U-Turn Follows Dramatic Farmer Protests
Chancellor Rachel Reeves has performed a significant U-turn on inheritance tax rules for agricultural property following intense pressure from UK farmers. The announcement came during Wednesday's budget speech, just hours after farmers staged dramatic protests with tractors outside Parliament.
The Treasury revealed that changes to agricultural inheritance tax could save farmers and business owners £30 million next year, rising to approximately £70 million annually until 2030. This concession follows widespread anger over original plans to remove decades-long tax exemptions for farmland.
What the New Inheritance Tax Rules Mean
From April, married farmers and those in civil partnerships will benefit from enhanced inheritance tax allowances. Under the new system, partners can transfer unused inheritance tax allowances of up to £1 million to each other if one dies without having used their full entitlement.
This significant change means a farming couple could potentially pass on £2 million of farmland to their children completely free from inheritance tax. The measure specifically helps those with deceased spouses or civil partners, ensuring they can combine their tax-free allowances.
From Protest to Policy Change
The chancellor's original announcement in October's budget sparked immediate controversy. Plans to bring farms under standard inheritance tax rules - intended to raise money for public services and close loopholes used by wealthy landowners - prompted large-scale demonstrations across the farming community.
On budget day itself, farmers defied police restrictions by parking tractors in Trafalgar Square and protesting along Whitehall. Several arrests were made during the demonstrations, which saw farmers using tractor horns to drown out ministerial speeches.
David Gunn, an arable farmer from Kent, expressed the frustration felt by many: "You said in the manifesto you would look after the farmers, which you totally haven't. You've ruined the countryside."
Mixed Reactions from Farming and Tax Experts
While the changes have been welcomed by some, farming leaders argue they don't go far enough. Tom Bradshaw, President of the National Farmers' Union, acknowledged the government had recognised its original proposals were flawed but stated: "This change goes nowhere near far enough to remove the devastating impact of the policy on farming communities."
Bradshaw noted the measures would help widowed farmers but wouldn't alleviate burdens on elderly and vulnerable members of farming families, urging the government to implement further supportive measures.
Tax expert Dan Neidle offered a more positive assessment, describing the chancellor's move as a "sensible change" that would reduce the need for complex long-term tax planning among farming families.
The inheritance tax controversy highlights the ongoing tension between government revenue-raising objectives and protecting the UK's agricultural sector, with Wednesday's protests demonstrating the strength of feeling within farming communities about their financial future.
