‘That’s it’: Minister rules out further farm inheritance tax concessions

The Environment Secretary has ruled out further concessions over the introduction of inheritance tax for farming businesses.

Speaking at a conference in Oxford, Emma Reynolds said the Government had listened to the concerns of farmers over the controversial plans to levy inheritance tax on their businesses and had “significantly increased” the threshold at which they would have to pay the tax.

Just before Christmas, the Government announced it was raising the inheritance tax relief threshold for farmers from £1 million to £2.5 million in a climbdown following months of protests over the original plans unveiled in 2024.

When asked at the Oxford Farming Conference on Thursday if farmers were right to continue to push for further inheritance tax reforms, Ms Reynolds replied: “That’s it, I’m afraid.”

As farmers protested outside the conference venue and sounded their tractor horns, she said: “May I also say, with the greatest respect to those outside, it’s the people in this room who have engaged with us constructively, and relatively quietly, that have had an influence on this process, and not the people sounding their horns.”

Speaking to journalists after her speech, Ms Reynolds described the inheritance tax row as an issue “personal” to her and one she cares “deeply” about.

Reiterating “that’s it” for inheritance tax reforms, the Environment Secretary added she has “no idea” what message protesters outside the conference venue wanted to convey.

She said: “I have no idea what they’re saying to me, other than the sounding of horns. Beeping a horn doesn’t really give me much to go on.”

In her speech to the conference, the Environment Secretary also pledged there would be “no more sudden, unexpected closures” of farming payment schemes, as she set out reforms to the flagship sustainable farming incentive (SFI).

The Government provoked fury last March with the abrupt closure of the SFI, which pays farmers in England for “public goods” such as insecticide-free farming, wildflower strips and managing hedgerows, as funding had been fully allocated for the year.

There has been ongoing uncertainty since then over the programme, a key strand in the environmental land management schemes which replaced agricultural subsidies after Brexit.

A farming profitability review by former National Farmers’ Union president Baroness Minette Batters, commissioned by the Government, warned late last year the sector was “bewildered and frightened”, with inheritance tax and SFI payment changes causing significant ongoing concern.

On Thursday, Ms Reynolds outlined plans for what she described as a “simpler, fairer and more stable” scheme.

She backed the overall approach of using agricultural payments to pay for environmental benefits, telling farmers at the conference: “Protecting the environmental foundations of farming isn’t separate from profitability, it’s essential to it.

“Because without healthy land, there is no food, and without profitable farms, there are no farmers to produce it.

“Healthy soil, clean water, thriving pollinators – these aren’t nice-to-haves.

“They’re business fundamentals, environmental necessities and the foundations of our food security.”

But she admitted “mistakes were made” over the payments regime in the past, and said SFI had become too complex, the unexpected closure last year damaged trust and confidence, and much of the available funding was being absorbed by bigger farms.

She said there would be two application windows, the first in June for small farms under 50 hectares (120 acres) and those not already in a payment scheme, and a second wider application window from September for all farms.

The Government was looking at changes, including slimming down the number of different nature-friendly farming initiatives funded, limiting the amount of land that could be put into an action, and considering a cap on the amount of money a farm business could receive for SFI, she said.

She said this would help the funding go further, and enable farmers to help “nature thrive everywhere, not just in a few places”.

She also pledged the Government would give farmers “regular updates” so they knew when a window for applications was close to being fully subscribed.

“Together, we will work with you to get the detail of these changes right, to deliver an SFI that is simpler, fairer and more stable, an SFI shaped with you, that works for you,” she said.

Ms Reynolds also outlined a new £30 million farmer collaboration fund, to support farmer groups to boost their businesses and work in partnership.

Following on from research into upland areas, the Government will work over the next two years in Dartmoor and then Cumbria with local people to design solutions to the problems they face, build new income streams and create skills and networks that can transform those areas, she said.

The farming in protected landscapes programme, which supports land managers in national parks and national landscapes boost nature, tackle climate change and preserve cultural heritage, will also be extended for three years with £30 million funding for the next year.