Farmers’ inheritance tax could affect five times more farms than Treasury said, analysis finds
The new inheritance tax policy could affect up to five times more farms than the Treasury initially said, according to new analysis.
The government said its plan to impose 20% inheritance tax on farms worth more than £1m will affect 500 farms in the 2026-2027 financial year, based on analysis of past claims.
However, the Central Association of Agricultural Valuers (CAAV) has looked at the numbers and found 2,500 farms could be affected each year.
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The group, which represents businesses across UK agriculture, found up to 75,000 individual farms over a generation – which they define as 30 years – could be affected by the tax.
Jeremy Moody, author of the report and secretary and adviser at CAAV, told Sky News the government figures had not taken into account farmers who only claim Business Property Relief (BPR).
Farmers’ children rode mini tractors at the protest. Pic Reuters
Farmers protested last week, saying the tax would mean the end of many family farms because they would have to sell off land to pay it.
Environment Secretary Steve Reed had previously promised he would not change inheritance tax for farmers.
Many have said the government’s figures were incorrect and more than 500 family farms would be affected a year.
The National Farmers’ Union (NFU) said the real number is two thirds of farms of the UK’s 209,000 farms, while the Country Land and Business Association (CLA) said 70,000 farms would be affected.
But Mr Reed has insisted the figure is based on “raw data” and said the Treasury had taken into account all possible figures.
The Treasury said its figures came from data on farms that had claimed Agricultural Property Relief (APR), as well as those who claimed both APR and BPR – but not solely BPR.
Currently, to get 100% inheritance tax relief farmers have to claim APR for farmhouses, land and buildings, and BPR for machinery and livestock – but this can also be claimed for land and buildings.
Read more:
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What’s the beef with farmers’ inheritance tax?
Not all farms have to claim BPR
Mr Moody explained some farms have to have farmhouses to be close to their livestock, so must claim APR for the farmhouse and BPR for machinery.
But, not all have to claim APR as not every farm includes a farmhouse. That’s because some farmers, mostly those who grow crops, do not live on the property – so they can just claim BPR.
“The Treasury didn’t look at BPR claims sitting there on their own,” he told Sky News.
“Unless you’re trying to argue the value of a farmhouse, which these days can be quite high, it’s just convenient to claim BPR on the land and machinery.
“A landowner might place the farm under BPR purely for simplicity because whether you claimed under APR or BPR has never mattered before.
“If a family farm is structured as a company then they also would only claim BPR, which isn’t wrong to do.”
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How long is a generation?
Mr Moody added government figures fail to consider that farms are typically handed down every 30 years, for example from an 85-year-old who dies to their 55-year-old son or daughter.
“The government’s figures accept that the effect from introducing inheritance tax is over 75 years, they didn’t think about how long a generation is,” Mr Moody said.
Because of spousal inheritance tax relief, the government has said a couple would be able to pass on a farm worth up to £3m before paying any inheritance tax. They said as it is payable over 10 years it will not be a big hit – something farmers disagree with.
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Farmer explains how tax will hit him
A government spokesman told Sky News: “Our commitment to our farmers is steadfast – we have committed £5bn to the farming budget over two years, including more money than ever for sustainable food production, and we are developing a 25-year farming roadmap, focusing on how to make the sector more profitable in the decades to come.
“We have been clear since this change was announced that around 500 claims of Agricultural and Business Property Relief each year will be impacted – this is based off actual claims data – and even when inheritance tax does kick in, it is effectively at half the rate paid by others.
“It is not possible to accurately infer inheritance tax liability from farm net worth figures as there are different circumstances affecting each farm, such as who owns it, the nature of ownership, how many people own it and how affairs are planned.”
Sir Keir Starmer has said his government stands ready to use industrial policy to “shelter British business from the storm” after Donald Trump’s new 10% tariff kicked in.
The UK was among a number of countries hit with the lowest import duty rate following the president’s announcement on 2 April – which he called ‘Liberation Day’, while other nations, such as Vietnam, Cambodia and China face much higher US levies.
But a global trade war will hurt the UK’s open economy.
The prime minister said “these new times demand a new mentality”, after the 10% tax on British imports into America came into force on Saturday. A 25% US levy on all foreign car imports was introduced on Thursday.
It comes as Jaguar Land Rover announced it would “pause” shipments to the US for a month, as firms grapple with the new taxes.
On Saturday, the car manufacturer said it was working to “address the new trading terms” and was looking to “develop our mid to longer-term plans”.
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Referring to the tariffs, Sir Keir said “the immediate priority is to keep calm and fight for the best deal”.
Writing in The Sunday Telegraph, he said that in the coming days “we will turbocharge plans that will improve our domestic competitiveness”, adding: “We stand ready to use industrial policy to help shelter British business from the storm.”
It is believed a number of announcements could be made soon as ministers look to encourage growth.
NI contribution rate for employers goes up
From Sunday, the rate of employer NICs (national insurance contributions) increased from 13.8% to 15%.
At the same time, firms will also pay more because the government lowered the salary threshold at which companies start paying NICs from £9,100 to £5,000.
Also, the FTSE 100 of leading UK companies had its worst day of trading since the start of the pandemic on Friday, with banks among some of the firms to suffer the sharpest losses.
Sir Keir said: “This week, the government will do everything necessary to protect Britain’s national interest. Because when global economic sands are shifting, our laser focus on delivering for Britain will not. And these new times demand a new mentality.”
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UK spared highest tariff rates
Some of the highest rates have been applied to “worst offender” countries including some in Southeast Asia. Imports from Cambodia will be subject to a 49% tariff, while those from Vietnam will face a 46% rate. Chinese goods will be hit with a 34% tariff.
Imports from France will have a 20% tariff, the rate which has been set for European Union nations. These will come into effect on 9 April.
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How will UK respond to Trump’s tariffs?
Sir Keir has been speaking to foreign leaders on the phone over the weekend, including French President Emmanuel Macron, Italian Prime Minister Giorgia Meloni and Australian Prime Minister Anthony Albanese, to discuss the tariff changes.
A Downing Street spokesperson said of the conversation between Sir Keir and Mr Macron: “They agreed that a trade war was in nobody’s interests but nothing should be off the table and that it was important to keep business updated on developments.
“The prime minister and president also shared their concerns about the global economic and security impact, particularly in Southeast Asia.”
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Trump’s warning
Mr Trump has warned Americans the tariffs “won’t be easy”, but urged them to “hang tough”.
In a post on his Truth Social platform, he said: “We are bringing back jobs and businesses like never before.
“Already, more than FIVE TRILLION DOLLARS OF INVESTMENT, and rising fast!
“THIS IS AN ECONOMIC REVOLUTION, AND WE WILL WIN. HANG TOUGH, it won’t be easy, but the end result will be historic.”
Crypto-friendly billionaire investor Bill Ackman is considering the possibility that US President Donald Trump may pause the implementation of his controversial proposed tariffs on April 7.
“One would have to imagine that President Donald Trump’s phone has been ringing off the hook. The practical reality is that there is insufficient time for him to make deals before the tariffs are scheduled to take effect,” Ackman, founder of Pershing Square Capital Management, said in an April 5 X post.
Trump may postpone tariffs to make more deals, says Ackman
“I would, therefore, not be surprised to wake up Monday with an announcement from the President that he was postponing the implementation of the tariffs to give him time to make deals,” Ackman added.
On April 2, Trump signed an executive order establishing a 10% baseline tariff on all imports from all countries, which took effect on April 5. Harsher reciprocal tariffs on trading partners with which the US has the largest trade deficits are scheduled to kick in on April 9.
Ackman — who famously said “crypto is here to stay” after the FTX collapse in November 2022 — said Trump captured the attention of the world and US trading partners, backing the tariffs as necessary after what he called an “unfair tariff regime” that hurt US workers and economy “over many decades.”
Following Trump’s announcement on April 2, the US stock market shed more value during the April 4 trading session than the entire crypto market is currently worth. The fact that crypto held up better than the US stock market caught the attention of both crypto industry supporters and skeptics.
Source: Cameron Winklevoss
Prominent crypto voices such as BitMEX co-founder Arthur Hayes and Gemini co-founder Cameron Winklevoss also recently showed their support for Trump’s tariffs.
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Ackman said a pause would be a logical move by Trump — not just to allow time for closing potential deals but also to give companies of all sizes “time to prepare for changes.” He added:
“The risk of not doing so is that the massive increase in uncertainty drives the economy into a recession, potentially a severe one.”
Ackman said April 7 will be “one of the more interesting days” in US economic history.
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