Welsh farmers attack 'misguided and ill-thought-out' inheritance tax Budget reforms
by Cathy Owen · Wales OnlineFarmers have slammed reforms set out in the Budget as being "misguided and ill-thought-out". NFU Cyrmu says changes to Agricultural Property Relief (APR) and Business Property Relief (BPR) will cause "lasting damage" and lead to the "break-up of family farms".
Chancellor Rachel Reeves announced a reform on inheritance taxes applied to farms during Wednesday's Budget announcement. She said from April 2026, the first £1 million of combined business and agricultural assets will continue to attract no inheritance tax. But for assets over £1 million, inheritance tax will apply with 50% relief, at an effective rate of 20%. See the key points from the budget if you live in Wales.
But the leading Welsh farming union fears the changes will leave farmers with "neither the means, confidence nor the incentive to invest in the future of their business". Jeremy Clarkson said that farmers had been "shafted". He has been campaigning for more government assistance for farmers who have been struggling since leaving the EU with little being done to replace subsidies.
Read more: Wales to get £1.7bn thanks to Chancellor Rachel Reeves Budget
Food critic Jay Rayner said: "There's great stuff in this budget. But the cut to farm inheritance tax breaks is not smart. It's framed as a benefit for a small number of people. It's not. It enables long-standing farming families to keep farming, which is what we need right now. Bet it's dropped."
NFU Cymru president Aled Jones said: “The changes announced are not only a threat to our family farm structure and our tenanted sector but also to our nation’s food security. The sort of restructuring we are likely to see in response to these changes is likely to mean there will be less land available for tenancies and contracts, the lifeblood of small family farm businesses and a critical point of entry for young and first-time farmers.
"NFU Cymru has written to the Chancellor twice and all Welsh MPs on this issue. In addition, the union and its members have raised this extensively when we have met with politicians at party conferences as well as in their constituencies. Despite all of these efforts, today’s budget confirms the UK Government’s intention to reform these reliefs and that will come as very disturbing news to farming families the length and breadth of Wales. This also goes against the previous assurance given by the Defra Secretary of State that the Labour Party had no plans to change Inheritance Tax, including APR.
"This tax-raid on agricultural property and businesses is misguided and will seriously harm our family farms, rural communities and our ability to produce affordable food for the nation, whilst delivering negligible revenue to the Treasury in terms of overall government spending.
"The changes announced today will see agricultural assets over £1m attract an inheritance tax at a rate of 20% from April 2026, something which will bring the majority of Wales’ family farms into the scope of this tax. Just because a family farm may look like a valuable asset on paper, that doesn’t mean those who work it are wealthy and able to meet a large tax bill.
"Whilst there is typically a lot of capital involved in farm businesses, the return on the capital employed in farming, after taking into account a wage for the farmer, averages less than 1%. Such a rate of return is completely insufficient to pay an inheritance tax charge of 20% upon the generational transfer of that farm. Unless we see an urgent reconsideration by the UK Government, I am afraid we are going to see the breakup of multi-generational family farms."
Farmers' Union of Wales president, Ian Rickman has also warned that changes to the agricultural property relief would have an impact on the viability of family farms and our rural communities - as well as adverse consequential effects for related businesses and employment.
He said: “We know the average size of farm holdings in Wales is around 120 acres - with even conservative estimates of land worth and buildings putting most farms at over £1 million in asset value.
“Agricultural Property Relief has long played an essential role to ensure those who inherit agricultural holdings are not crippled by taxes when family farms are passed from one generation to the next.
“We await further details regarding APR and what the announcement today means for Welsh Government budgets, but at a challenging period for farming in Wales, this news will add further uncertainty to farm businesses doing their utmost to produce food and enhance the environment.”
NFU President Tom Bradshaw said: "This budget not only threatens family farms but also makes producing food more expensive which means more cost for farmers who simply cannot absorb it and it will have to be passed p the supply chain or risk the resilience of our food production.
"It's been a disastrous budget for family farmers and especially tenant farmers, The shameless breaking of clear promises on agricultural property relief will snatch away the next generation's ability to carry on producing British food, plan for the future and shepherd the environment.
"It's clear the government does not understand or perhaps doesn't care, that many family farms are not only small farms, and that just because a farm is a valuable asset, it doesn't mean those who work it are wealthy. This is one of a number of measures in the budget which make it harder for farmers to stay in business and significantly increase the cost of producing food.
"Before the election Keir Starmer promised to establish a new relationship with farming and the countryside. Well, he's certainly done that."