Row over how many farms will be affected by inheritance tax policy - as PM doubles down

Sir Keir Starmer has insisted the “vast majority of farmers” will not be affected by changes to Inheritance Tax (IHT) ahead of a protest outside parliament on Tuesday.

It follows Chancellor Rachel Reeves announcing a 20% inheritance tax that will apply to farms worth more than £1m from April 2026, where they were previously exempt.

But the prime minister looked to quell fears as he resisted calls to change course.

Speaking from the G20 summit in Brazil, he said: “If you take a typical case of a couple wanting to pass a family farm down to one of their children, which would be a very typical example, with all of the thresholds in place, that’s £3m before any inheritance tax is paid.”

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The comments come as thousands of farmers, including celebrity farmer Jeremy Clarkson, are due to descend on Whitehall on Tuesday to protest the change.

And 1,800 more will take part in a “mass lobby” where members of the National Farmers’ Union (NFU) will meet their MPs in parliament to urge them to ask Ms Reeves to reconsider the policy.

Speaking to broadcasters, Sir Keir insisted the government is supportive of farmers, pointing to a £5bn investment announced for them in the budget.

He said: “I’m confident that the vast majority of farms and farmers will not be affected at all by that aspect of the budget.

“They will be affected by the £5bn that we’re putting into farming. And I’m very happy to work with farmers on that.”

Sir Keir’s spokesman made a similar argument earlier on Monday, saying the government expects 73% of farms to not be affected by the change.

Environment, Farming and Rural Affairs Secretary Steve Reed said only about 500 out of the UK’s 209,000 farms would be affected, according to Treasury calculations.

However, that number has been questioned by several farming groups and the Conservatives.

Government figures ‘misleading’

The NFU said the real number is about two-thirds, with its president Tom Bradshaw calling the government’s figures “misleading” and accusing it of not understanding the sector.

The Country Land and Business Association (CLA) said the policy could affect 70,000 farms.

Conservative shadow farming minister Robbie Moore accused the government last week of “regurgitating” figures that represent “past claimants of agricultural property relief, not combined with business property relief” because he said the Treasury does not have that data.

Agricultural property relief (APR) currently provides farmers 100% relief from paying inheritance tax on agricultural land or pasture used for rearing livestock or fish, and can include woodland and buildings, such as farmhouses, if they are necessary for that land to function.

Farmers can also claim business property relief (BPR), providing 50% or 100% relief on assets used by a trading business, which for farmers could include land, buildings, plant or machinery used by the business, farm shops and holiday cottages.

APR and BPR can often apply to the same asset, especially farmed land, but APR should be the priority, however BPR can be claimed in addition if APR does not cover the full value (e.g. if the land has development value above its agricultural value).

Mr Moore said the Department for the Environment, Farming and Rural Affairs (DEFRA) and the Treasury have disagreed on how many farms will be impacted “by as much as 40%” due to the lack of data on farmers using BPR.

Lib Dem MP Tim Farron said last week1,400 farmers in Cumbria, where he is an MP, will be affected and will not be able to afford to pay the tax as many are on less than the minimum wage despite being asset rich.

This article was originally published by Sky.com. Read the original article here.

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