New report highlights ‘alarming’ financial impact of inheritance tax changes for farmers

A new report on inheritance tax changes for farmers has highlighted the “alarming” financial impact of the reforms, the Farmers Union of Wales has said.

The independent paper recently published by CBI Economics and commissioned by Family Business UK provided comprehensive estimates of the economic and fiscal impacts of the UK Government policy.

The controversial changes will see land and businesses worth more than £1 million face a 20% levy from April 2026.

UK Ministers have insisted the cash raised from the changes will help stabilise the UK’s finances and fix creaking public services.

The proposals have faced fierce opposition within the sector, sparking widespread protests from farmers who marched on the UK Parliament and the Senedd.

Job losses

The new independent report analysed findings from 4,147 family businesses and farms across the UK.

It recommended that the reduction in business activity will lead to a loss in Gross Value Added (GVA) of £14.8 billion over the next five years.

Farming unions have warned this could lead to a potential loss of 208,500 full time jobs.

While the Chancellor, Rachel Reeves, expects to raise £1.8 billion in tax revenue by 2030 as a result of the reforms – the report estimates a net fiscal loss of £1.9 billion over the same period.

‘Not surprising’ 

FUW Head of Policy, Gareth Parry, described the findings as “alarming” but “not surprising”.

He said: “These figures demonstrate exactly what we, and many others, have been warning about since the Budget Statement last year.

“Specifically for the farming sector and its associated supply chains, the proposed APR reforms are predicted to result in 28,300 job losses, demonstrating yet again the HM Treasury’s failed attempts to justify its proposals based on simple economic calculations.

“The potential wider economic and social impacts are now clear to see.”

For both business turnover and investment, the agricultural and horticultural sector is expected to see the greatest declines.

In Wales, the changes are expected to reduce GVA by £580 million, result in 9,715 job losses and reduce business turnover by 12.2%.

Mr Parry added: “Whilst our focus is clearly on the agricultural sector in Wales, this report highlights very clearly the possible financial impacts for family businesses across all UK sectors.

“We will certainly be referring the Welsh Affairs Committee to the findings of this report as they continue with their inquiry into the opportunities and challenges of farming in Wales on Wednesday.

“But with such clear and comprehensive analyses now available on the UK-wide impacts of these reforms for all family businesses, how long can the UK Treasury continue to ignore such findings before agreeing to work with all sectors to design a fair policy?”

‘Reckless’

The Senedd Conservatives have branded the inheritance tax changes “reckless” and warned that they “threaten the breakup of the family farm”.

Shadow Cabinet Secretary for Rural Affairs, Samuel Kurtz MS, said: “UK Labour’s reckless inheritance tax changes threaten the livelihoods of hardworking farming families, risk decimating the rural economy and these latest figures underline what we’ve long known, that this would end up costing the economy more than it would raise in revenue.

“The Welsh Labour Government have already clobbered the industry with the Wales-wide Nitrate Vulnerable Zone (NVZ), botched Sustainable Farming Scheme (SFS) and their failure to control bovine TB, UK Labour’s unfair family farm tax added insult to injury. Instead of offering support, both Governments are driving rural communities into financial instability.

“Labour’s family farm tax threatens lives and livelihoods in rural Wales undermining generations of hard work and threatens the breakup of the family farm.”