Food prices could rise due to Rachel Reeves’s farm inheritance tax change in budget, farmers warn
Rachel Reeves’ changes to agricultural inheritance tax could lead to food price rises and will have a “catastrophic” impact on family farms, farmers have warned.
The chancellor announced in Wednesday’s budget inheritance tax of 50%, at an effective rate of 20%, will be imposed on farms worth over £1m, where previously they were exempt.
Her announcement has been met with anger from rural communities, with celebrities such as Jeremy Clarkson saying farmers “have been shafted”, and Kirstie Allsopp saying the chancellor has “destroyed the ability [for farmers] to pass farms on to their children”.
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Farmers and the Conservative shadow farming minister have told Sky News the plan, which is due to begin in April 2026, risks pushing up food prices due to uncertainty and the possibility of farms having to be sold up so less food is produced.
National Farmers’ Union (NFU) president Tom Bradshaw said the policy “will snatch away” the next generation’s ability to produce British food.
Fourth generation Warwickshire farmer Bizza Walters, 26, told Sky News she would be forced to sell some of her family farm’s 500 acres to pay the £7,500 a month she has estimated she would have to pay for 10 years if her father and uncles, who own the farm, died.
“Our margins and costs are so tight and anything we make is reinvested, so I’d have to sell land which would not go back into food production,” she said.
“They’re going to have to come to their senses because food prices will go up because we won’t be able to produce as much food.”
Jeremy Clarkson, whose TV show has opened up the struggles of farming to millions, said farmers have ‘been shafted’. Pic: PA
Country Land and Business Association (CLA) president Victoria Vyvyan told Sky News the government has “conflated a business asset with personal wealth” in their bid to tax the wealthy.
But she said farms are businesses and most run on tight margins with little spare cash.
She added a £1m farm would only be about 100 acres in most UK areas, “which is not a viable business proposition”.
The £1m cap could also rack up quite quickly as it is not just the value of land, but also livestock, farmhouses, sheds and machinery.
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Most farms are run on small margins. Pic: Sky News
Conservative shadow farming minister Robbie Moore, who is from a farming background, said the move is “catastrophic for family farms”.
“This is effectively thievery, putting two fingers up to the farming industry,” he told Sky News as he accused the government of failing to understand how farming works.
“They’ve completely underestimated the effect this will have, it creates a lot of uncertainty in terms of how that land will be managed.
“If you want to invest in that holding to produce food, you need certainty, and what the announcement creates is uncertainty.
“It will have a direct impact on the food security agenda and food prices further down the line.
“If you’re wanting to work hard to hand farmland down to the next generation, you’re completely disincentivised to do that.”
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He reiterated what lots of farmers have been saying: that their land may be high in value, but they are struggling with cashflows, so paying tax to continue the family business may not be viable for many.
NFU president Mr Bradshaw added: “This budget not only threatens family farms but will also make producing food more expensive.
“This means more cost for farmers who simply cannot absorb it, and it will have to be borne by someone.
“Farmers are down to the bone and gristle, who is going to carry these costs?”
The government says it is still committed to supporting farmers and “the vital role they play to feed our nation”.
Speaking on Thursday, the chancellor described the changes as “fair and proportionate”.
“We needed to raise money in the budget yesterday, and we know that there are a lot of landowners who are very wealthy, some who buy land to avoid paying inheritance tax because previously there was no inheritance tax,” she said.
The Department for Environment, Food and Rural Affairs (DEFRA) has been contacted for comment.
Ex-Tory chairman Sir Jake Berry has defected to Reform, in the latest blow to the Conservatives.
The former MP for Rossendale and Darwen, who served as Northern Powerhouse minister under Boris Johnson and lost his seat last year, said he had defected to Nigel Farage’s party because the Tories had “lost their way”.
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Reform UK confirmed the defection to Sky News, which was first broken by The Sun.
Speaking to the paper, Sir Jake said Mr Farage’s party was the “last chance to pull Britain back from terminal decline”.
“Our streets are completely lawless,” he said.
“Migration is out of control. Taxes are going through the roof.
“And day after day, I hear from people in my community and beyond who say the same thing: ‘This isn’t the Britain I grew up in’.”
Sir Jake accused his former party of “abandoning the British people” but said he was not “giving up”.
“I’m staying. And I’m fighting.
“Fighting for the Britain I want my kids, and one day, my grandkids, to grow up in.”
Mr Farage welcomed what he said was “a very brave decision” by Sir Jake.
“His admission that the Conservative government he was part of broke the country is unprecedented and principled,” he added.
A Conservative Party spokesman said: “Reform support increasing the benefits bill by removing the two-child cap, and nationalising British industry. By contrast the Conservatives, under new leadership, will keep making the case for sound money, lower taxes and bringing the welfare bill under control.
“We wish Jake well in his new high spend, high tax party.”
Sir Jake’s defection to Reform comes just days after former Conservative cabinet minister David Jones joined Reform UK, which continues to lead in the polls.
Former Welsh secretary David Jones (R) alongside Tory MP Mark Francois. Pic: PA
Mr Jones, who was MP for Clwyd West from 2005 until standing down in 2024, said he had quit the Tories after “more than 50 years of continuous membership”.
Sir Jake was the MP Rossendale and Darwen in Lancashire between 2010 and 2024, when he was defeated by Labour’s Andy MacNae.
He held several ministerial posts including in the Department for Housing, Communities and Local Government, Energy and Climate Change and the Cabinet Office.
Nigel Farage after winning the Runcorn and Helsby by-election.
Pic: Reuters
He was also chairman of the Conservative Party from September to October 2022, under Liz Truss.
Announcing his defection – which comes a year after the Tories suffered their worst ever election defeat – Sir Jake said “Britain was broken” and “the Conservative governments I was part of share the blame”.
“We now have a tax system that punishes hard work and ambition,” he said.
“Just this week, we saw record numbers of our brightest and best people leaving Britain because they can’t see a future here. At the same time, our benefits system is pulling in the world’s poor with no plan for integration and no control over who comes in.
“If you were deliberately trying to wreck the country, you’d be hard-pressed to do a better job than the last two decades of Labour and Tory rule.
“Millions of people, just like me, want a country they can be proud of again. The only way we get that is with Reform in government. That’s why I’ve resigned from the Conservative Party. I’m now backing Reform UK and working to make them the next party of government.”
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He added: “And with Nigel Farage leading Reform, we’ve got someone the country can actually trust. He doesn’t change his views to fit the mood of the day. And people respect that. So do I. That’s why I believe he should be our next prime minister.”
A Labour Party spokesperson said: “Not content with taking advice from Liz Truss, Nigel Farage has now tempted her Tory Party chairman into his ranks.
“It’s clear Farage wants Liz Truss’s reckless economics, which crashed our economy and sent mortgages spiralling, to be Reform’s blueprint for Britain. It’s a recipe for disaster and working people would be left paying the price.”
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