UK govt to relax farmers inheritance tax after protests

The change, which will take effect in April, will allow spouses or civil partners to pass on up to £5 million in qualifying agricultural or business assets between them before paying inheritance tax, on top of existing allowances, the government said.

Assets above that threshold will receive 50 percent relief.

The number of estates facing higher inheritance tax will fall from around 2,000 to up to 1,100. For agricultural estates, the figure drops from 375 to 185, the government said.

The revision follows months of anger and protests from farmers, including convoys of tractors slowing down traffic in central London, over the initial tax changes announced in Labour's autumn 2024 budget.

Those proposals would have required farmers to pay inheritance tax on their assets for the first time in decades, with 100 percent tax relief only available for the first £1 million of property.

A recent independent review for the government, said the proposals had led to farmers contemplating suicide to avoid the tax changes.

National Farming Union (NFU) president Tom Bradshaw said the announcement would be a "huge relief to many" and would "greatly" reduce the tax burden for many family farms.

"We have listened closely to farmers across the country and we are making changes today to protect more ordinary family farms," said environment minister Emma Reynolds as she announced the policy.

The leader of the opposition Conservative party, Kemi Badenoch, said it was a "huge U-turn by the government" on their "cruel, immoral" farm tax plans.

"It would have pushed farms to the brink, damaged our food supply, and hurt the people who work long hours to feed the country," she posted on X.

The government said the reforms will make the tax system fairer by ensuring only the largest estates face higher bills.

An amendment to the Finance Bill will be introduced in January to implement the change.