The changes to inheritance tax rules for farmers caused huge controversy when they were announced a year ago, with fears for the future of family farms.
One of the most vocal local farmers is Joanna Hilditch who said: “I am not feeling very positive. We would absolutely hope that the tax would be scrapped, but at this point the government are not looking like they are turning. For the relatively minimal funds it’s going to raise (£0.5 billion), it just seems like a war cry against those of us who are trying to help feed the country. ”
The Managing Director of White Heron went further, adding that the wait for news is nothing short of crucifying, on top of an incredibly stressful farming year.
Working Whittern Farms near Lyonshall she said: “Not only is waiting for this budget crucifying and nerve wracking, but there are other stresses that have been piled on to us in addition.
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“Soon after the last budget were a round of cuts that exacerbated the situation.
“Those farmers who were hoping to plant Sustainable Farming Incentive environmental schemes suddenly had the rug pulled from under them with no alternative planting opportunities. Added to that the dry summer has made life very difficult for many with poor yields from any annual crops and poor market prices to boot. Every which way we turn there seems to be another door slammed in our face. ”
These all add up to what could be a total change of the face of farming, both across Herefordshire and nationally, she warned.
“Anecdotally I hear of many who are thinking of giving up and certainly older people who are hoping that they don’t make it through to next April and even talking about taking drastic action,” warned Jo.
“The mental health challenge for farmers in a rural county like Herefordshire where such a large part of the community relies on agriculture is enormous.”
As it stands, farms are almost entirely exempt from inheritance tax – thanks to two policies called Agricultural Property Relief (APR) and Business Property Relief (BPR).
Farm owners have been able to use a combination of these reliefs to pass on their farmland and associated business assets, tax free.
But under new plans announced in the Budget, these reliefs will together be capped at one million pounds – so farm land and farm assets over that value will be subject to inheritance tax at 20 per cent.
What was announced in the Budget?
From 6 April 2026, the full 100% relief from inheritance tax will be restricted to the first £1 million of combined agricultural and business property.
Above this amount, landowners will access 50% relief from inheritance tax and will pay inheritance tax at a reduced effective rate up to 20%, rather than the standard 40%. This tax can be paid in instalments over 10 years interest free, rather than immediately, as with other types of inheritance tax.
This is on top of all the other spousal exemptions and nil-rate bands that people can access for inheritance tax too. This means that two people with farmland, depending on their circumstances, can pass on up to £3 million without paying any inheritance tax.
Is it fair? Inheritance tax changes for farmers are ‘fair’ says minister
Jo added: “There has been some talk on the airwaves that the threshold may be raised which for a husband and wife could be £10 million altogether – but what social engineering says that all farmers should be married or that the other partner could easily have built their own business.
“What people don’t seem to understand is that although farmers appear to be very rich they have no cash but they have to have the asset to run the business!
“Therefore running the business relies on having an asset which is totally overvalued as far as the business is concerned. Almost every farmer I have spoken to would have to sell off some of their assets in order to pay the tax bill and would be unlikely to be able to cover it from income.
“Most farmers see their role in the world as stewards of the countryside and never intend to sell their land and buildings but have always trusted that the next generation will be able to carry on in the way they have. ”
