Farmers throughout the UK have reacted with fury to the announcement that the tax relief for farm inheritances will be capped at £1 million.
On Wednesday, during the budget announcement, the Chancellor revealed that, starting in April 2026, there would be a 50% reduction in inheritance tax for assets from businesses and agriculture valued at less than £1 million. However, for assets valued at more than £1 million, the tax rate would be reduced to 20%, marking a significant change.
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For years, the APR tax relief has allowed small family-owned farms, which encompass agricultural land for growing crops or raising livestock, as well as farm structures, cottages, and residences, to be passed down from one generation to the next without incurring inheritance tax.
The National Farmers’ Union has described the budget as a disaster for family-owned farms, arguing that it will “snatch away the next generation’s ability to carry on producing British food” and force farmers to sell their land to cover the tax burden.
A spokesman for farmers’ union NFU Scotland said: “The devil will be in the detail, but it was made crystal clear to the chancellor by all UK farming unions the significant impact that any changes around taxation will have of our farming sector.
“She has chosen to ignore that advice.
“Changes to inheritance tax and agricultural property relief will affect the liquidity on succession for farms above the £1m threshold set, hitting many family farms, regardless of size or type.
“Decisions to reinvest in these farming businesses will be shelved. The knock-on ramifications for the wider rural economy, and businesses up and downstream will be significant.”
The Scottish Liberal Democrats have been particularly vocal about the potential impact on rural Scotland. Scottish Liberal Democrat Alistair Carmichael MP stated: “I fear that the Treasury does not realise the damage that this change to inheritance tax could do. As well as cutting deep into the heart of rural communities, it could be utterly devastating for rural Scotland.”
Conservative rural affairs spokesman and Moray sheep farmer Tim Eagle, MSP for the Highlands and Islands, commented:
“These changes mean future food production is seriously threatened, as farms will be unable to be passed on from one generation to another.
“Labour need to show some common-sense and urgently think again.
“These inheritance tax changes will be catastrophic for family farms across Scotland.”
While the government maintains that only a small number of the largest estates will be affected, the Country Land and Business Association believes up to 70,000 farms could face the consequences of this new tax policy.
The government said it was still committed to supporting farmers and “the vital role they play to feed our nation”.
Food Security Minister Daniel Zeichner said: “Our commitment to farmers and the vital role they play to feed our nation remains steadfast.”
