Hopes dashed for change of heart on IHT in reshuffle

Hopes that the recent government reshuffle might also signal a change of heart in terms of imposing inheritance tax on family farms appear to have been dashed.

Answering MPs questions in parliament on Tuesday (9 September), newly appointed chief secretary to the Treasury James Murray insisted that the plan to levy 20% inheritance tax (IHT) on farm assets worth more than £1m from next April was “balanced” and “fair”.

See also: NFU president presses Reynolds on farm policy

“We have been listening [to the farm unions], however the government continues to believe that the approach we have set out is the right one,” he said.

The potential damage IHT might cause to the farming sector was raised by several MPs, including David Chadwick, Liberal Democrat MP for Brecon, Radnor and Cwm Tawe.

“Why is the government targeting family farms with tax rises, rather than going after the big banks who are closing branches across my constituency?” he asked.

“Why should young farmers have to pay for the mess left by the previous government?”

Conservative MP for East Hampshire Damian Hinds also pointed to the slump in farm investment since the IHT announcement last October, urging a government rethink.

But Mr Murray rejected the suggestion.

“The system coming in from April next year is one that will retain generous tax reliefs under agricultural property relief and business property relief, while also raising revenue in a fair way to support the public finances,” he said.

Unfair and unbalanced

Mr Murray also dismissed a suggestion from John Cooper, MP for Dumfries and Galloway, that a recent report from the CenTax think tank showed the government’s IHT plan to be “unfair and unbalanced”.

“The right honorable gentleman is wrong,” said Mr Murray.

“The CenTax report he refers to demonstrates that the reform improves on the current position and is expected to largely meet the government’s objectives. It in fact validates the government’s position.”

Frustration 

The continued government intransience will come as a frustration to farm leaders, who have been unsuccessfully pressing for a meeting with the chancellor Rachel Reeves since the IHT plans were first unveiled in the October 2024 Budget.

A recent survey by the NFU shows that 66% of the public say they believe the government should overturn the so-called “family farm tax”.

“Key to the long-term future of our farms is improving the profitability of sustainable food production,” said NFU president Tom Bradshaw following his meeting with new Defra secretary Emma Reynolds on Monday (8 September).

“One simple thing the government can do is the right thing on inheritance tax, to avoid bereaved farming families having to fork out for an unaffordable tax bill – something we know the public stands behind.”