MP warns inheritance tax changes ‘threaten the future of Welsh family farms’

Plaid Cymru’s Agriculture spokesperson in Westminster, Ann Davies MP, has warned that the UK Labour Government’s proposed inheritance tax changes “threaten the future of Welsh family farms”.

MS Davies, the MP for Caerfyrddin, will today (28 January) lead a debate on the government’s proposed changes to inheritance tax.

The debate follows a new wave of protests across the UK at the weekend against the controversial reforms which were announced in October’s Budget.

In her first budget, the Chancellor Rachel Reeves, announced that from April 2026, taxes would apply to agricultural assets over £1mn (or up to £3mn in certain circumstances).

Loopholes

Ahead of her Westminster Hall debate, Ms Davies said that her party supports “closing loopholes that allow billionaire landowners to avoid paying their fair share” but warned that Labour’s current approach will also “undermine working family farms that have been the heart of Welsh communities for generations.”

In her speech during Tuesday’s debate, she is expected to demand a Wales-specific analysis to fully understand the impact of the proposals on family-run farms.

The Farmers’ Union of Wales (FUW) has highlighted significant flaws in the Treasury’s calculations.

By including smallholdings and non-working farms in its estimates, the Treasury has downplayed the true scale of the threat. According to the FUW, nearly 90% of farms responsible for agricultural output in Wales could face inheritance tax bills far exceeding their incomes, creating an existential crisis for the agricultural sector.

Ahead of the debate, Ms Davies said: “The proposed changes to inheritance tax will undermine working family farms that have been the heart of Welsh communities for generations. Plaid Cymru supports closing loopholes that allow billionaire landowners to avoid paying their fair share.

“But I’m afraid that Labour simply doesn’t understand that this change will also hit hardworking family farms that are already struggling to make ends meet.

“A one-size-fits-all approach ignores the unique challenges of Welsh farming. Farms are not just businesses – they are family legacies, vital to our rural economy, and key to preserving our Welsh-speaking culture. These plans could leave farmers facing crippling tax bills, forcing them to sell land or shut down completely. This isn’t just an economic issue – it could threaten a way of life.

“We need a Wales-specific impact assessment that reflects the realities of our agricultural. I’m urging all Welsh MPs to join me in making the case to the UK Government to listen to Welsh farmers, conduct a proper analysis, and rethink this damaging policy before it’s too late.”

Steadfast

Speaking after the protests at the weekend, a UK Government spokesperson said: “Our commitment to farmers remains steadfast.

“This Government will invest £5 billion into farming over the next two years, the largest budget for sustainable food production in our country’s history.

“We are going further with reforms to boost profits for farmers by backing British produce and reforming planning rules on farms to support food production.

“Our reform to Agricultural and Business Property Relief will mean estates will pay a reduced effective inheritance tax rate of 20%, rather than standard 40%, and payments can be spread over 10 years, interest-free.

“This is a fair and balanced approach, which fixes the public services we all rely on, affecting around 500 estates a year.”