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.
Shabana Mahmood has become the first ever Muslim woman in British history to serve as home secretary.
After just over a year as justice secretary, which saw her decide to release some prisoners early to free up jail spaces, she will now be in charge of policing, immigration, and the security services.
The 44-year-old replaced Yvette Cooper, 10 years after she helped run Cooper’s failed Labour leadership campaign, and faces flag-waving anti-immigration protesters and the growing threat of Nigel Farage’s Reform UK.
Raised in Birmingham and Saudi Arabia
Shabana Mahmood was born in Birmingham to parents from the Pakistani-administered region of Azad Kashmir.
Soon after they were born, they moved her and her twin brother to the Saudi Arabian city of Taif, where her father worked as a civil engineer and the family would make regular visits to religious sites in Mecca and Medina.
After seven years, they moved back to Birmingham and her father, still employed as a full-time engineer, bought a corner shop and became chairman of the local Labour Party.
She attended an all-girls grammar school and then Oxford University to study law at Lincoln College, where she was elected Junior Common Room president, with a vote from former Prime Minister Rishi Sunak, who was in the year above her.
After university, she moved to London to train as a lawyer, specialising in professional indemnity for most of her 20s.
On a visit to Solihull Mosque, West Midlands, in August 2024. Pic: PA
‘My faith is the centre point of my life’
At the age of 29 in 2010, she was elected MP for her home constituency of Birmingham Ladywood, a safe Labour seat, with a majority of just over 9%, which grew to 82.7% at its peak in the snap election of 2017.
Along with Rushanara Ali and Yasmin Qureshi, this made her one of Britain’s first female Muslim MPs.
In an interview with The Times, she said: “My faith is the centre point of my life and it drives me to public service, it drives me in the way that I live my life and I see my life.”
She held several shadow cabinet positions under Ed Miliband’s leadership, including shadow prisons and higher education minister, and shadow financial secretary to the treasury.
Being sworn in as justice secretary in July 2024. Pic: PA
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Often described as ‘blue Labour’, Mahmood returned to the backbenches when Jeremy Corbyn took over as party leader in 2015, telling him as she refused a shadow cabinet position: “I’ll be miserable and I’ll make you miserable as well.”
She had chaired her now-predecessor Yvette Cooper’s failed campaign to beat him to the leadership.
During the Corbyn years, she was elected to the Parliamentary Labour Party’s National Executive Committee and as vice chairman of the party’s National Policy Forum.
When Mr Corbyn was replaced by Sir Keir Starmer, Ms Mahmood became national campaign coordinator and was tasked with preparing Labour for the next general election.
During her two-and-a-half years in that job, she is credited with helping Labour win the Batley and Spen by-election and helping Sir Keir recover from Labour’s defeat in Hartlepool – where the Conservatives won for the first time ever in 2021.
On a visit to HMP Bedford in July 2024. Pic: PA
At the opening of HMP Millsike in March. Pic: PA
Early prison release scheme and views on Gaza
Soon after becoming justice secretary and lord chancellor, Mahmood commissioned a report into the crumbling prison estate.
Carried out by one of her Conservative predecessors, David Gauke, it revealed they were practically full, and triggered a controversial decision to release more than 1,000 inmates early to ease pressure on the system.
The Ministry of Justice were forced to apologise after it emerged 37 prisoners had been released by mistake.
Holding a taser at an event to launch a taser trial in a male prison in Oxfordshire in July. Pic: PA
She has also endorsed tougher immigration laws, announcing in August that foreign criminals will be deported after sentencing, and has been critical of their use of human rights lawyers, calling for reform of the European Convention on Human Rights as a result.
Answering questions on Asian grooming gangs, she previously told former Tory minister Michael Gove in The Spectator that there is “still a moment of reckoning” and an “outstanding question of why so many looked the other way”.
Shabana Mahmood shakes hands with US Homeland Security Secretary Kristi Noem on 8 September. Pic Reuters
She has also been vocal on Labour’s stance on Gaza, warning the prime minister that “British Muslims are feeling a very strong sense of pain” and that the government would have to rebuild their trust.
When she was last re-elected in 2024, she suffered a 42% drop in her majority, facing off an independent candidate whose campaign centred around Palestinian rights.
Like her parliamentary neighbour, Labour MP Jess Phillips, she said the election campaign had been “sullied by harassment and intimidation”.
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