Keir Starmer has caved into months of pressure from the farmers with Labour today backtracking on plans to introduce inheritance tax for farmers.
It comes amid accusations that the Labour government has “declared war on the countryside” following the introduction of new animal rights legislation in the last 24 hours which will further restrict farming practices and ban trail hunting.
Announced by chancellor Rachel Reeves last year, farmers were to be charged 20 per cent on agricultural assets above £1m from April 2026, triggering a storm of fury, with fears family-run farms would be worst impacted.
But on Tuesday, following a year of protests, Labour said it was changing the plan by raising the threshold from £1 million to £2.5 million, removing most farms from having to pay it.
The government said this would allow spouses or civil partners to pass on up to £5 million in qualifying agricultural or business assets between them before paying inheritance tax, on top of existing allowances.
Environment secretary Emma Reynolds said: ”Farmers are at the heart of our food security and environmental stewardship, and I am determined to work with them to secure a profitable future for British farming.
“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.”
But campaign group No Farmers, No Food warned that the climbdown was not enough.
They said: “Huge news for family farmers. The Labour government have finally u-turned on the inheritance tax on family farms. They have announced that the threshold is rising to £2.5 million. It’s still not enough, but it’s still a huge victory for everyone who has relentlessly campaigned on this.”
National Farmers Union (NFU) president Tom Bradshaw said: “After months of NFU campaigning, the government has today announced changes to the threshold for inheritance tax for family farms. These changes mark a huge victory for British farmers.”
The fury over the so-called Tractor Tax or Family Farm Tax, had seen regular protests in London with tractors descending on Whitehall.
After Sir Keir had reached out to the farming community before the election the change to inheritance tax was seen as a “breach of trust” with farmers groups warning that even with the climbdown today Labour will “find it hard to win back.”
Tory shadow environment secretary Victoria Atkins described the climbdown as “too little, too late”.
She posted on X: “At long last, Labour has snuck out a partial U-turn on their vindictive Family Farm Tax. It is too late for some, however. Businesses and lives have been lost. Rural communities will not forget the distress, pain and panic this government has caused them.”
Lib Dem rural affairs spokesman Tim Farron welcomed the news but added: “It is utterly inexcusable that family farmers have been put through over a year of uncertainty and anguish since the Government first announced these changes.
“This is about justice and security – if we undermine British farming then we also undermine our ability to provide us with the food we need to keep us secure in an uncertain world.
“Yet many family farms will still find themselves financially crippled and barely making the minimum wage.”
