Typical family farm ‘would have to spend 159% of its profits for a decade to pay inheritance tax’, says rural land group
A typical family farm would have to put 159% of annual profits into paying the new inheritance tax every year for a decade and could have to sell 20% of their land, according to new analysis.
Chancellor Rachel Reeves announced in her 30 October budget farms would no longer get 100% relief on inheritance tax, and from April 2026 will have to pay 20% tax on farms worth over £1 million.
The announcement has sparked anger among farmers who argue this will mean higher food prices, lower food production and having to sell off land to pay for the tax.
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Ministers said the move will not affect small farms and is aimed at targeting wealthy landowners who buy up farmland to avoid paying inheritance tax.
However, analysis by the Country and Land Business Association (CLA), which represents owners of rural land, property and businesses in England and Wales, found a typical 200-acre farm owned by one person with an expected profit of £27,300 would face a £435,000 inheritance tax bill.
The plan says families can spread the inheritance tax payments over 10 years, but the CLA found this would require an average farm to allocate 159% of its profits each year for a decade.
To pay that, successors could be forced to sell 20% of their land, the analysis found.
Farmers protested against the plan outside a farming conference in Northumberland. Pic: PA
The CLA said their model shows how family farms, which are mostly asset-rich but cash-poor, would be forced into a cycle of stagnation, asset sales or debt to cover the tax.
This would threaten the long-term viability of the UK’s rural landscape and food security, the association said.
The government has said other tax relief will still apply to farmers, so if a married couple owns the farm they can pass on the land and property valued up to £3m to a child or grandchild tax-free.
This is made up of the £1m each of agricultural property allowance plus £500,000 each in standard tax-free allowance for passing on an estate worth less than £2m to children or grandchildren.
The CLA’s analysis found a 250-acre arable farm owned by a couple with an expected annual profit of £34,130 would still face an inheritance tax bill of £267,000 – 78% of its profit each year over a decade.
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Gavin Lane, deputy president of the CLA, said: “Either the government isn’t being honest with the public about the true impact of these reforms, or they don’t understand the nature of rural businesses.
“I’d like to believe it is the latter and that they are prepared to listen to our input rather than continually trying to dismiss it.
“While they frame this as a tax on the wealthy, the reality is that ordinary family farms will be hit just as hard.
“Asking farms to use their income to pay a huge capital tax bill over 10 years, if indeed it is possible, will threaten the future of investment and the viability of the business.”
File pic: iStock
The Treasury said the change will make inheritance tax relief “fairer, protecting small family farms”.
An explanation of the plan on the government’s website said the top 7% (the largest 117 claims) of agricultural property relief claims account for 40% of the total relief, costing the taxpayer £219m.
The top 2% of claims (37 claims) account for 22% of agricultural property relief, costing £119m, it says.
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“It is not fair for a very small number of claimants each year to claim such a significant amount of relief, when this money could better be used to fund our public services,” the website adds.
It also says the chancellor announced £5bn to help farmers produce food over the next two years, alongside £60m for the Farming Recovery Fund to help farmers recover from the impact of flooding.
Sky News has contacted the Treasury for a comment on the latest analysis.
It has become almost impossible to book a driving test on the government website due to bots on the booking system, driving instructors have told Sky News.
The only official way to book a practical car driving test is through the Driver and Vehicle Standards Agency (DVSA) website.
New test slots are released by the DVSA at 6am every Monday, but “no matter how fast I am, there’s nothing available”, said Aman Sanghera, a driving instructor based in west London.
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When asked about the cause, she said: “All of the tests are taken by bots, they are definitely taking over the booking system.”
In this context, bots are automated software designed to mimic human behaviour and programmed to carry out actions like searching for and reserving driving test appointments on the official government website much faster than humans can.
Individuals and companies use bots to block-book driving test slots and then resell them at a profit, which is not illegal, although it is a violation of the DVSA’s terms of use.
Recent data shows the DVSA has closed over 800 business accounts for misuse of its booking service in the past two years.
It takes five months on average for a test in England – unless you pay a middleman
Ms Sanghera, who has been in the trade for over a decade, said the usage of bots started a few months ago “but is now getting out of hand”.
She said: “I’ve actually heard about driving instructors being approached by certain individuals to then take on their IDs to log in and to run this scam.
“I struggle to actually book a test for my students, which means that by the time my students are logging in, they’ve got no chance.”
Driving instructors can book driving tests on behalf of their pupils using a dedicated service, allowing them to bypass the general queue and potentially secure test slots more efficiently.
As a result, Ms Sanghera said students are “forced to go to third-party sites” to secure “the same test dates which are then available later on during the day at a premium rate of like £200-£300”.
She added: “Given that the DVSA is a government-regulated body, one would expect a more robust and fair system to ensure affordability and accessibility for all candidates.”
The long waiting lists and high demand for tests has led some to take advantage
The standard test fee is £62, offered by the DVSA, which is responsible for carrying out driving tests in Great Britain.
The biggest concern for the driving instructors Sky News has spoken to, including Ms Sanghera, is “the fact that students are being exploited”.
When Ahmed Ali struggled to find a practical test on the DVSA website, he turned to third-party sites – a decision he now regrets.
Ahmed Ali started looking for a test two years ago
He said: “I’ve spent about £650 on driving tests, and I’ve sat zero tests. I’ve given all this money to third-parties that look for cancellations so they could try to get you a faster test.”
But the 20-year-old said that despite making the payments, he “didn’t hear back from them again”, which is illegal.
“When you lose all that money, you get to a point where you can’t really afford to find another driving test,” he said.
“I just feel very frustrated because I’ve spent all this money, all this time into driving, and I haven’t sat a single driving test.”
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The DVSA urged applicants to only book tests via the official Gov.uk website and told Sky News it “deploys enhanced bot protection to help stop automated systems from buying up tests unfairly”.
“These applications, however, are constantly evolving and changing, and DVSA’s work on this is ongoing,” it said.
From Tuesday, the DVSA will require learner drivers to provide 10 full working days’ notice to change or cancel their car driving test without losing the test fee, up from the current three days.
Also part of the DVSA’s crackdown to reduce waiting times is a consultation expected to launch in spring 2025 “to streamline the driving test booking process” and “tighten terms and conditions”.
The last blast furnaces left operating in Britain could see their fate sealed within days, after their Chinese owners took the decision to cut off the crucial supply of ingredients keeping them running.
Jingye, the owner of British Steel in Scunthorpe, has, according to union representatives, cancelled future orders for the iron ore, coal and other raw materials needed to keep the furnaces running.
The upshot is that they may have to close next month – even sooner than the earliest date suggested for its closure.
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The fate of the blast furnaces – the last two domestic sources of virgin steel, made from iron ore rather than recycled – is likely to be determined in a matter of days, with the Department for Business and Trade now actively pondering nationalisation.
The upshot is that even as Britain contends with a trade war across the Atlantic, it is now working against the clock to secure the future of steelmaking at Scunthorpe.
The talks between the government and Jingye broke down last week after the Chinese company, which bought British Steel out of receivership in 2020, rejected a £500m offer of public money to replace the existing furnaces with electric arc furnaces.
The sum is the same one it offered to Tata Steel, which has shut down the other remaining UK blast furnaces in Port Talbot and is planning to build electric furnaces – which have far lower carbon emissions.
These steel workers could soon be out of work
However, the owners argue that the amount is too little to justify extra investment at Scunthorpe, and said last week they were now consulting on the date of shutting both the blast furnaces and the attached steelworks.
Since British Steel is the main provider of steel rails to Network Rail – as well as other construction steels available from only a few sites in the world – the closure would leave the UK more reliant on imports for critical infrastructure sites.
However, since the site belongs to its Chinese owners, a decision to nationalise the site would involve radical steps government officials are wary of taking.
They also fear leaving taxpayers exposed to a potentially loss-making business for the long run.
The dilemma has been heightened by the sharp turn in geopolitical sentiment following Donald Trump’s return to the White House.
The incipient trade war and threatened cut in American support to Europe have sparked fresh calls for countries to act urgently to secure their own supplies of critical materials, especially those used for defence and infrastructure.
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Gareth Stace, head of UK Steel, the industry lobby group, said: “Talks seem to have broken down between government and British Steel.
“My advice to government is: please, Jonathan Reynolds, Business Secretary, get back round that negotiating table, thrash out a deal, and if a deal can’t be found in the next few days, then I fear for the very future of the sector, but also here for Scunthorpe steelworks.”
British Steel declined to comment.
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