Farmers still enjoy 'generous' tax regime, No 10 says - despite budget backlash
Farmers still benefit from a "generous" tax regime, Number 10 has argued, following a backlash over the chancellor's decision to charge more inheritance tax on their land and property.
A Downing Street spokeswoman told reporters support for farmers "remains steadfast" and that three quarters of farms would remain unaffected by the changes announced by Rachel Reeves in her budget on Wednesday.
In her maiden budget, the chancellor confirmed that from April 2026, the Treasury will alter agriculture property relief and introduce a 20% tax rate on the value of all farms and businesses worth more than £1m - where previously they were exempt.
The change has prompted an angry backlash from rural communities, with celebrities such as Jeremy Clarkson arguing farmers "have been shafted", while Kirstie Allsopp said the chancellor had "destroyed the ability [for farmers] to pass farms on to their children".
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Farmers are particularly concerned that the new £1m limit on inheritance tax relief on farmland could take away the ability to pass on their farms to future generations.
The £1m cap does not just account for the value of land, but also livestock, farmhouses, sheds and machinery.
Despite the furore, the prime minister's spokeswoman said the government was taking a "balanced and proportionate approach" to taxation and that it was "still a generous regime" for farmers.
"We have maintained our commitment and increased the agriculture budget," she said.
"This step addresses cases where we’ve seen people buying up land not for farming and exploiting a loophole."
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The National Farmers Union (NFU) also said it could result in farmers having to either borrow money or sell off parcels of land to pay the tax while others have warned that food prices could rise as a result.
NFU president Tom Bradshaw told Sky News the changes to agricultural inheritance tax will "snatch away" the next generation's ability to produce British food, while the Conservative shadow farming minister Robbie Moore said it had created a "lot of uncertainty" which was bad for food production.
However, Downing Street said it was confident changes to inheritance tax on farms would not affect food security and insisted there was adequate financial support available to farmers.
"There is an increase in the agricultural budget, there is also an increase in environmental schemes that support sustainable farming and food production," the spokeswoman said.
"So, we would encourage farmers to get in contact where they have concerns so we can ensure everyone is receiving the support and schemes available to them, and also that they have the full details of how the agricultural property relief system works."
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The spokeswoman said the government's message was "clear that we are committed to supporting farmers", adding: "It is expected that almost three-quarters of estates are expected to be unaffected by this."
On Monday, Steve Reed, the environment secretary, will meet the NFU to discuss its concerns about the budget.
Writing in The Daily Telegraph on Friday, Mr Reed said: "I completely understand farmers' anxiety at any changes. But rural communities need a better NHS, affordable housing and public transport that we can provide if we make the system fairer.
"Look at the detail and you'll see that the vast majority of farmers will not be affected at all. They will be able to pass the family farm down to their children just as previous generations have always done.
"I am not prepared to let our public services continue to crumble while the wealthy buy up huge estates robbing young farmers of their dreams, just to avoid paying their taxes. This is a scandal."
