Delay inheritance tax plan, MPs tell government

• Vulnerable farmers most at risk

• Tax impact disputed and unclear

• More time to seek proper advice

MPs have called for a year-long delay to government plans to impose inheritance tax on farm assets worth more than £1 million from 2026.

The cross-party Environment, Food and Rural Affairs (Efra) Committee said a 12-month pause “would allow for better formulation of tax policy” and give government ministers the chance to convey a positive long-term vision for farming.

Delaying the plan – due to come into effect from April 2026 – would also protect vulnerable farmers who would have “more time to seek appropriate professional advice,” said the Efra committee.

Rebuild trust

Changes announced in the autumn Budget 2024 were made without adequate consultation – or a proper impact and affordability assessment, said committee chairman Alistair Carmichael MP.

This meant the impact of the changes on family farms, land values, tenant farmers, food security and farmers across the UK was “disputed and unclear” – with a risk of producing unintended consequences.

Mr Carmichael said: “There is an opportunity here to rebuild trust and confidence in the farming sector and I hope that the government will take our recommendations seriously.”

A raft of announcements – including the sudden closure of capital grants, the closure of Sustainable Farming Incentive scheme and the faster phase-out of direct payments –had left farmers feeling they could not rely on the government.

“The government, however, seems to be dismissing farmers’ concerns and ignoring the strength of feeling evidenced in the months of protests that saw tractors converge on Westminster and up and down the country.”

Poor and confusing

Defra’s communications with farmers have been poor, with confusing and sometimes contradictory messaging, said Mr Carmichael.

He added: “Policies affecting farmers have been announced without due consideration or explanation of their impact or rationale.”

Some 70% of farmers felt optimistic about their rural businesses before the Budget, suggested a March 2025 survey. But that number fell to 12% afterwards, said Mr Carmichael.

“Farmers urgently need clarity, certainty and advance notice of changes – they cannot be expected to rethink their businesses on a whim. It is essential that Defra focuses on rebuilding trust through good-faith communications with the sector.”

A government spokesman said 75% of estates would continue to pay no inheritance tax at all under the plan – while the remaining quarter would “pay half the inheritance tax that most people pay”.

SFI scheme partially reopens to 3000 farmers

Defra is contacting thousands of farmers who were left in the lurch following the abrupt closure of the Sustainable Farming Scheme.

It follows a government decision to reopen the scheme to 3000 farmers who had started an application but not yet submitted it in the two months before the SFI was suddenly  closed on 11 March. The farmers had threatened legal action over the closure.

The decision to reopen the scheme came after the group of farmers, supported by the NFU, wrote to Defra secretary Steve Reed to inform him of their intention to legally challenge his decision to close the SFI to new applicants without notice.

New applicants

A notice on the Rural Payments Agency website had assured farmers they would be given six weeks notice of any intention to close the SFI to new applicants. But the scheme was closed with immediate effect at 6pm on 11 March.

NFU President Tom Bradshaw said: “While it’s good to see an acknowledgement that the decision to close the scheme was flawed, we are disappointed by the constraints imposed which will still leave many farmers unfairly disadvantaged.”