Winter fuel U-turn sparks hope for farm tax rethink

The government’s decision to reverse planned changes to winter fuel payments for the elderly has sparked fresh hope that it may also reconsider its controversial inheritance tax (IHT) reforms for family farms.

Farm leaders and MPs say the U-turn shows ministers are open to listening – and are now urging the same rethink on IHT policy, which they warn could devastate thousands of farm businesses.

During prime minister’s questions on Wednesday (21 May), Alistair Carmichael, chairman of the Environment, Food and Rural Affairs (Efra) select committee, called on Sir Keir Starmer to pause and rework the proposals.

See also: Delay farm tax raid or risk rural ruin, MPs warn Labour

A cross-party committee report (PDF) published last week backed efforts to tackle tax avoidance, but said the current plans would hit working farms unfairly.

Questioning Keir Starmer in PMQs on farm inheritance tax – and on the EFRA cross-party report calling for a pause.

The PM’s response will be a disappointment to farmers and to many on his own benches, who are convinced that the government should rethink the tax on family farms. pic.twitter.com/XNueGeFAqD

— Alistair Carmichael MP (@amcarmichaelMP) May 21, 2025

“We took the unanimous view that the government’s current proposals will catch too many family farms who will simply not be able to pay the bill,” said Mr Carmichael.

“We are asking for the changes to be paused and reworked.”

Sir Keir responded by insisting the tax would only affect farming estates “at a very, very high level” and pointed to increased farm investment and new EU trade arrangements to support the sector.

But Mr Carmichael said the answer “will be a disappointment to farmers and to many on his own benches” and called for compromise.

‘Still time to change course’ – NFU

The NFU echoed his concerns, and said up to 75% of farming families could be affected by the changes, which are due to come into force in April next year.

It criticised the government’s refusal to release the financial analysis behind the decision, despite multiple Freedom of Information requests.

NFU president Tom Bradshaw said: “The change to winter fuel payments shows the government is willing to listen to concerns about the elderly.

“We’re urging them to extend that same support to elderly farmers who have spent their lives feeding the nation.”

He urged ministers to adopt the farming industry’s proposed “clawback” scheme, a cost-neutral alternative that would protect farm succession while avoiding damage to rural communities.

“Whatever our other disagreements about the family farm tax, we cannot imagine ministers ever meant to put older farmers in this awful position,” Mr Bradshaw said.

“There is still time to change course.”