Rachel Reeves tells livid farmers it is ‘fair’ they pay more death tax

Rachel Reeves has slapped down farmers furious at Budget plans to hike inheritance tax on agricultural land, saying it is a ‘fair’ way of raising money.

The Chancellor defended her decision to reform the way death taxes affect farms amid fury from the industry and high-profile celebrities like Jeremy Clarkson and Kirstie Allsopp. 

From April 2026, inheritance tax will be levied at an effective rate of 20 per cent on the value of business and agricultural assets over £1million in a shake-up of Agricultural Property Relief (APR).

Previously, farmers’ families could claim up to 100 per cent APR on the agricultural value of the land they owned, with no threshold. 

Campaigners have warned that the decision will affect almost all family farms, slamming the Government for breaking ‘clear promises’ to protect the industry. 

Ms Allsopp was the most outspoken, accusing Ms Reeves of having ‘f***ed all farmers’ and ‘destroyed their ability to pass farms on to their children’.

Meanwhile, Tory MPs warned that it would damage UK food security and hinder efforts to make farming more environmentally friendly. 

But the Chancellor last night insisted that almost three-quarters of farms would be unaffected and said farmers were getting a far better deal than everyone else paying IHT at the full 40 per cent rate.

She told Channel 4 News: ‘On top of the normal inheritance tax threshold that you can pass on – a couple of million pounds including a house – to your descendants, in addition, agricultural property relief will now provide another million pounds of tax-free allowance and then above that there is a 50 per cent discount on inheritance tax compared with what everyone else pays.

‘We have got to raise money. I feel we’ve done that in fair and balanced way – 73 per cent of farmers won’t be paying a single penny more in inheritance tax.’

The National Farmers’ Union predicts the change will ‘snatch away the next generation’s ability to carry on producing British food’ – and could lead to higher prices.

And the Country Land and Business Association said the move, from April 2026, would hit 70,000 farms – calling it ‘nothing short of a betrayal’ which would ‘jeopardise the future of rural businesses’.

Ms Allsopp said the Chancellor ‘had f***ed all farmers, she has destroyed their ability to pass farms on to their children, and broken the future of all our great estates, it is an appalling decision which shows the Government has ZERO understanding of the what matters to rural voters.’ 

While Mr Clarkson, whose show Clarkson’s Farm follows his efforts to run a 1,000-acre farm in the Cotswolds, posted on X: ‘Farmers. I know that you have been shafted today. 

‘But please don’t despair. Just look after yourselves for five short years and this shower will be gone.’

But Downing Street is confident that changes to inheritance tax on farms will not affect food security and insisted there was adequate financial support available to farmers.

Asked if ministers were confident the changes would not hurt food security, a No 10 spokesman this morning said: ‘Yes. We are committed to supporting farmers.

‘There is an increase in the agricultural budget, there is also an increase in environmental schemes that support sustainable farming and food production.

‘So, we would encourage farmers to get in contact where they have concerns so we can ensure everyone is receiving the support and schemes available to them, and also that they have the full details of how the agricultural property relief system works.’

The spokesman said the Government’s message was ‘clear that we are committed to supporting farmers’, adding: ‘It is expected that almost three-quarters of estates are expected to be unaffected by this.’

Lib Dem leader Sir Ed Davey joined the chorus of those attacking the IHT raid today. During a visit to Maidenhead in Berkshire, he said: ‘The Government is at risk of creating a lost generation of farmers. Young people will lose the opportunity to keep the farms their families have run for generations, while at the same time they are seeing government support for farming slashed.

‘Hitting British farmers who put food on our tables only risks making the cost of living crisis worse. After years of being taken for granted by the Conservative Party, rural communities should have been properly supported in this Budget.’

Meanwhile, Tory MPs warned that it would damage UK food security and hinder efforts to make farming more environmentally friendly.

The Budget also reduced cash for the Environment Land Management Scheme (ELMS). It was set up after Brexit to replace the EU Common Agricultural Policy, which subsidised measures including ‘local nature recovery’ habitat creation on farms.

Former minister George Freeman, MP for Mid Norfolk, said: ‘Family farming is under attack from this government. The changes to APR will make it harder for family farmers of all sizes to pass on their proud agricultural tradition to the next generation. 

‘How we manage our land is integral to tackling climate change, reversing biodiversity loss and ensuring our food security. But, combined with a trailed cut to the ELMS budget next year, the Government is playing fast and loose with family farms, our environment, our food security, and the local rural economy.’

Patrick Spencer, MP for Central Suffolk and North Ipswich, said: ‘If Labour is serious about its pledges to protect the environment, farmers and food security, it cannot go ahead with these changes to APR. 

‘Farmers are the custodians of our countryside and their relationship with our land, unlike the Chancellor’s own economic whims, spans generations, not just news cycles. Cutting the nature-friendly farming budget next year, as implied in this Budget, would be a fool’s errand for a government supposedly wanting to fight climate change, protect nature and support British farmers. 

‘In her misguided attempt to ”tax the rich”, she risks delivering a major blow to Britain’s proud family farming tradition and the UK’s environmental ambitions.’