Thousands of farms could face inheritance tax raid

• Single farm owners at most risk

• Retailers in government warning

• Plan now for secure farm future

More than 42,000 farms larger than 50ha (125 acres) will be affected by changes to inheritance tax rules, suggest the latest estimates.

The Agriculture and Horticulture Development Board has calculated that 42,204 out of 54,938 farms (76.8%) will be impacted by new tax rules due to come into effect next year across England and Scotland.

The rules will see farm assets worth more than £1m subject to 20% inheritance tax. It follows the government’s autumn Budget decision to abolish full-rate agricultural and business property relief from April 2026.

‘Most at risk’

AHDB analyst Tom Spencer said: “Our calculations show that cereals and general cropping farms are the most likely to be affected due to their scale and asset size. For livestock farms, it is those businesses with single person ownership most at risk.”

The figures were released in the wake of last month’s Farming Day of Unity which saw hundreds of growers and livestock producers explaining to shoppers in town centres and supermarket car parks the impact that the tax will have.

NFU president Tom Bradshaw said: “Farm businesses are often the bellwether of the rural economy and many have curtailed investment on their farms because any penny they had or could have borrowed will now have to go on saving the future of the farm.”

Britain’s big supermarket chains are backing farmers against the government over inheritance tax, warning that food security could be under threat. Some High Street banks have also issued warnings.

The AHDB study is based on farm balance sheet data mainly from Defra, the Farm Business Survey and the Scottish Government. Agricultural incomes are so low many farms would have to sell-off assets to pay the tax, rendering them unviable.

More than half the affected farms are involved in cereals or general cropping production as their main enterprise, with the rest predominantly livestock producers or mixed farming operations.

Seek advice

The AHDB has already reported that due to the low rate of return on net current assets in farming, the most cost-effective way a cereals producer could pay their expected tax burden would be to sell parcels of land.

AHDB economics and analysis director David Eudall said: “The debate, on whether the change to Inheritance Tax is the right decision, is not for AHDB to comment on. Our priority is to help explain how this will impact many levy payers.”

With so many farms affected, it means 140 farm businesses every day between now and April 2026 must ensure their businesses are set up so they can manage the implications when the tax changes take effect.

“It is critical for any affected farming enterprise to seek out expert tax and business planning advice. Succession planning was already important in agricultural farming businesses, now it is essential.”

‘Family farm tax’ petition delivered to Downing St

A petition signed by more than 270,000 people has been handed to Downing Street urging the government to ditch the ‘family farm tax’.

Warning that many family farms face being driven out of business, NFU president Tom Bradshaw and NFU Cymru president Aled Jones delivered the petition to No 10 on behalf of the UK’s four main farm unions last month.

After decades of tightening margins, record inflation, increased production costs and extreme weather, many farmers and growers are at breaking point and simply will not be able to afford the increased tax bill they will now face.

The NFU says it consulted with former Treasury and Office for Budget Responsibility economists to inform its analysis of the impact of inheritance tax reforms on commercial family farms.

Their research echoes the latest AHDB findings, which suggest that up to 75% of working farms could be affected – with some facing swingeing tax bills running into hundreds of thousands of pounds.