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The government’s recently announced inheritance tax reform for family farms has sent a wave of concern across rural communities. Previously, agricultural property could be passed on to heirs without incurring inheritance tax. The new rules limit this relief to £1 million. Any value above this threshold will be subject to the 20% tax rate. This change threatens the stability of many family farms and the future of farming as we know it.
As a member of the NFU Fellowship Scheme, I hear directly from farmers who’ve committed their lives to the land, weathering challenges most of us never see. This latest tax change has left many feeling penalised simply for wanting to pass on a lifetime’s work to the next generation. The median net worth of UK farms already stands around £1.5 million, meaning around 27% of family farms could be affected by this policy. Farmland, equipment, and livestock have high intrinsic value, often making family farms “asset rich but cash poor.” Forcing families to pay large sums in inheritance tax could lead to debt, forced sales, or the dismantling of generational farms. This policy shows a real lack of understanding about rural communities and the lives of farmers. Farms are often passed down through generations—that continuity is what keeps our rural communities thriving. Breaking that chain, just to meet an inheritance tax bill, is not only short-sighted but also harmful to the very backbone of these areas.
The Cost to Rural Communities
Beyond the numbers, this policy will impact rural communities that depend on local farms for employment, produce, and cultural identity. For many areas, farming is more than an industry—it’s a way of life, and family farms are at the heart of these communities. Forcing these farms to sell land or take on debt to cover inheritance taxes risks disrupting entire rural ecosystems, from local suppliers to seasonal workers and consumers.
The National Farmers’ Union has voiced the frustration and anger felt by many farmers who feel they are being asked to sacrifice more while receiving little in return. These farms are not just businesses; they represent a heritage of stewardship and a commitment to providing food security for the nation. Adding a tax burden to that equation risks deterring future generations from continuing this essential work.
A Fairer Approach for Farmers
The Liberal Democrats have been pushing for more sustainable and supportive policies for farmers, advocating for an additional £1 billion in yearly agricultural support to counter the impact of rising costs and harsh economic conditions. Inheritance tax should not be another challenge for farmers but should instead be adjusted to recognise the unique value of these family-run businesses. Given the added pressures of Brexit and volatile markets, the government’s new policy feels like a step backwards in providing the stability that the agricultural sector desperately needs.
By recognising the vital role of farmers, we can advocate for policies that protect the livelihoods of those who provide the backbone of our rural communities. I am committed to standing with our farmers and ensuring that our government prioritises them, rather than penalising them.