Farmers devalue holdings over IHT fears, poll finds

Nearly nine in 10 rural family businesses have paused investment, and some are deliberately shrinking their farms to avoid inheritance tax bills they cannot afford, a new CLA survey of 700 businesses reveals.

Respondents said they had cancelled holiday home projects, put off buying machinery, stopped growing crops, delayed drought-busting reservoirs and let buildings and land deteriorate.

“I am doing everything I can to devalue my business to reduce the tax burden for my children,” one said.

See also: Cameron and Blunkett unite in attack on family farm tax

More than one-third of those who had cancelled investment had shelved projects worth over £150,000, while 64% had abandoned plans worth over £50,000.

The UK government insists the £2.5m (£5m for married couples or civil partners) relief allowance protects most family businesses, but nearly 85% of respondents said it does not cover the value of their business, citing rising costs of machinery, livestock and crops.

Asset-rich but cash-poor, many would be forced into asset sales or debt to pay the bill. Nearly 50% said they would have to sell at least one-quarter of their land, and one in four said more than half.

It comes as the average farm earned just £29,800 in 2025 after a string of poor harvests. Seven in 10 fear their business will not survive the next decade, and 29% are seriously considering leaving farming within five years.

CLA president Gavin Lane said: “We’ve warned for years that the logic behind this tax is perverse and self-defeating. Now the data proves why.”

He added: “Families who’ve spent decades building up their businesses are being forced to shrink them down again just to keep hold of them.”

U-turn plea

The CLA is urging Andy Burnham and chancellor John Healey to scrap the reforms at the Budget, due on Wednesday 28 October.

Mr Lane challenged the prime minister directly: “Burnham says he wants growth in every postcode. But this will be impossible until he reverses the tax actively destroying it.”

The Mail on Sunday recently reported that Mr Burnham’s allies want to abolish the levy, at an estimated cost of £300m/year, though raising the threshold to £5m is also reportedly under consideration.

Labour peer Lord Blunkett called the tax “a mistake made in the Treasury, but presented by my own party”, while David Cameron branded it “stupid”. Baroness Batters said the money raised would fund the NHS for “less than a week”.

Defra response

A Defra spokesperson said: “We are starting a new conversation with farmers. One of the prime minister’s first visits was meeting farmers hit by brutal drought and dry weather, announcing a £65m package to help them through these challenging conditions.

“We are also providing grants to help the sector access cutting-edge technology, boosting productivity and creating a profitable future for the industry.”

Government says about 85% of estates claiming agricultural property relief in 2026-27 are forecast to pay no more inheritance tax. The Treasury said Budget matters are for the chancellor.

The CLA is urging members to write to their MPs, particularly in Labour-held seats, share their experiences and invite them onto their farms.