Inheritance Tax U-Turn: Farmers & Tory Criticism

(LONDON, december 24, 2025) – The British government announced a significant reversal on inheritance tax policy for farmers on Tuesday, raising the threshold for taxing inherited farmland to £2.5 million, according to a press release from the environment department.

The government increased the inheritance tax threshold for farmland after months of pressure from farmers and lawmakers, a move critics say was deliberately timed to avoid scrutiny.

• The threshold for taxing inherited farmland will rise from £1 million to £2.5 million.
• Shadow environment Secretary Victoria Atkins accused the government of attempting to avoid parliamentary scrutiny by announcing the change shortly before Christmas eve.
• The move comes after pressure from farmers, campaigners, and Labor MPs, some of whom were prepared to rebel against the government.

Inheritance Tax U-Turn

the government’s decision to raise the inheritance tax threshold represents a policy reversal, responding to sustained pressure from the agricultural sector. Rachel Reeves initially announced plans to tax inherited agricultural assets worth more than £1 million at a rate of 20%, removing existing reliefs dating back to the 1990s, as reported last year.

Victoria atkins, the shadow environment secretary, criticized the timing of the announcement, stating, “This being snuck out the day before Christmas Eve means that, of course, we haven’t had chance to scrutinise this properly in parliament.” She further suggested the government was attempting to “slip this under the radar” while the public is preoccupied with Christmas preparations.

The announcement was made by Environment Secretary Emma Reynolds via a press release, rather than through the Chancellor, Atkins noted.Reynolds stated on Tuesday that the threshold would be raised to £2.5 million.

Did you know? – Inheritance tax,also known as estate tax,is levied on the value of a person’s estate after thier death,above a certain threshold. Reliefs exist to protect working farms.

Financial Implications

Treasury figures indicate the change will reduce the amount of revenue raised from the tax from £430 million to £300 million. Officials have not specified how the £130 million shortfall will be addressed, though they noted it represents a small fraction of the £22 billion of fiscal headroom currently held by Chancellor Rachel Reeves.

The National Farmers’ Union (NFU) president, Tom Bradshaw, described the announcement as a “huge relief to many” on Tuesday.

Pro tip – Farmers should consult with financial advisors to understand how this change impacts their estate planning and potential tax liabilities. Record keeping is crucial.

Concerns Remain

Despite the U-turn, Atkins indicated that concerns remain regarding the tax’s impact on farms. “There will still be farms out there, where – as of the investment and the nurturing of the land by their fathers, grandfathers, grandmothers, great grandmothers over the generations – they simply will not be able to pay this tax bill, even with this welcome U-turn by the government,” she said.

Keir Starmer acknowledged last week that some farmers had expressed concerns about contemplating suicide over the prop

Reader question – Do you think the government should have announced this policy change during a more public parliamentary session? Share your thoughts.