Inheritance tax report a ‘wake-up call’, says NFU

Family farms across the UK face devastating cuts to investment and jobs due to government inheritance tax (IHT) reforms, warns NFU president Tom Bradshaw, responding to a new Family Business UK (FBUK) report.

The FBUK’s Taxing Futures report (opens as PDF), backed by independent analysis from CBI Economics, reveals that changes to agricultural property relief (APR) and business property relief (BPR), announced in the Autumn Budget, could cause farm investment to drop by more than 20% on average.

About 60% of family businesses expect to reduce investment, while nearly one-quarter have already cut staff in response, according to the analysis, which involved 4,174 businesses and farms.

See also: Farmer’s tragic death sparks inheritance tax outrage

The research estimates a shocking 208,500 job losses across family businesses and their supply chains by the end of this Parliament, alongside nearly £15bn in lost economic activity.

Northern Ireland, the Midlands, and parts of England are set to bear the brunt of the cuts.

“FBUK’s new report shows only too clearly the catastrophic impacts on family farming businesses across the UK of this government’s punitive Family Farm Tax,” said Mr Bradshaw.

“This report must serve as a wake-up call to the Treasury, or we face major cuts to investment and significant job losses.”

‘Clawback’ alternative

Mr Bradshaw stressed the urgent need for government intervention, urging the Treasury to reconsider its approach.

He called on ministers to look again at the industry’s proposed clawback policy, which would require the full 40% tax to be paid only when inherited assets are sold.

“It is not too late for Treasury ministers to listen, to do the right thing, and change direction, for the sake of farming and the wider economy,” he said, highlighting the critical importance of timely action.

The report comes amid rising concern over the human cost of the tax changes.

The death of 78-year-old Yorkshire farmer John Charlesworth – reportedly under severe stress over the reforms – highlights the mental toll on farming families.

Neil Davy, chief executive of Family Business UK, warned: “No industry, sector, region or parliamentary constituency will be immune.

“Family businesses are tearing up long-term plans to invest in their communities.”

Treasury response

A Treasury spokesman said: “Our reforms to agricultural and business property reliefs will mean three-quarters of estates will continue to pay no inheritance tax at all, while the remaining quarter will pay half the inheritance tax that most estates pay, and payments can be spread over 10 years, interest-free.

“This is a fair and balanced approach which helps fix the public services we all rely on.”