Farm closures rise in Wales amid growing IHT concerns

New figures have revealed a sharp increase in the closure of agricultural, forestry and fishing businesses in Wales – sparking further alarm over the impact of the UK government’s proposed farm inheritance tax policy.

According to data obtained by the Welsh Liberal Democrats from the Office for National Statistics, nearly 3,000 businesses in these vital rural sectors have shut their doors since the last Senedd election in 2021.

In total, 2,835 closures have been recorded over that period, with the pace accelerating dramatically in recent years.

See also: Record farm closures amid IHT reforms and rising costs

In 2024 alone, 615 such businesses closed – more than any other year on record.

And in the first half of 2025, 390 closures have already been recorded, prompting opposition parties and farming groups to link the trend to the anticipated introduction of Labour’s farm inheritance tax policy from April 2026, dubbed the “family farm tax” by the NFU and others.

Critics warn the policy could force smaller, often family-run farms to shut down or sell up, devastating rural economies and threatening the future of the Welsh language in farming heartlands.

About 43% of agricultural workers are Welsh speakers – more than double the national average – making the sector a crucial stronghold for linguistic and cultural preservation.

“This is more than just bad policy – it’s an existential threat to our communities,” said Llanidloes councillor and Senedd Lib Dem candidate Glyn Preston.

“Labour’s tax plans risk hollowing out rural Wales, not only economically, but culturally too.”

The Welsh Liberal Democrats are calling for an immediate U-turn on the policy, urging the government to instead target the profits of major banks and invest in rural infrastructure.

Reaction

Samuel Kurtz, the Welsh Conservatives’ shadow rural affairs secretary, said the figures “expose the shocking reality of Labour’s sustained attack on rural Wales”.

He said: “After 26 years in power, Welsh Labour is out of ideas, while UK Labour wasted no time in punishing farmers after the general election.

“What’s even more alarming is that these 3,000 closures are not faceless corporations.

“They are family businesses that keep rural Wales alive. Every closure weakens our rural communities and threatens their future.”

NFU Cymru deputy president Abi Reader said: “Agriculture is embedded in the social, cultural and economic fabric of Wales.

“Policies or geopolitical volatility that negatively impacts our farmers is, more often than not, felt far beyond the farmgate. This is because of the unique interlinkage of family farms to an array of businesses who rely on produce and services arising from a vibrant agricultural sector.

“Stability is crucial therefore not just to the farms themselves, but the wider business community.”

Government response

The UK government again insisted that most estates claiming agricultural and business property reliefs will be unaffected by the IHT changes.

A spokesman said: “The latest data shows that 40% of agricultural property relief – worth £219m – was directed to just 117 estates. The money raised will go towards public services we all rely on every day instead.”

Farmers Weekly has requested a comment from the Welsh government.