Welsh Labour accused after farm tax climbdown

Welsh Labour has been accused of “sitting on their hands” while farmers forced a UK Government U-turn on inheritance tax changes affecting agricultural land, following months of protests and pressure from rural communities.

Shadow Rural Affairs Secretary Sam Kurtz, said Labour MPs in Wales had backed the controversial reforms when it mattered, only to welcome changes once ministers in Westminster were forced into a partial climbdown.

Earlier this week, the UK Government announced it would raise the inheritance tax relief threshold on agricultural land from £1 million to £2.5 million, following sustained opposition from farmers, unions and rural businesses.

The move significantly waters down proposals first unveiled in Labour’s initial Budget last year, which would have restricted full relief to the first £1 million of qualifying assets.

Under the revised plans, couples will be able to pass on up to £5 million in agricultural or business assets without paying inheritance tax, with estates above that level receiving 50% relief and facing an effective tax rate of up to 20%.

Ministers say the changes will reduce the number of estates affected from around 2,000 to about 1,100, targeting only the largest farms.

Mr Kurtz said the change had come about  “only because of relentless pressure” from farmers and rural communities.

“Let’s be clear: these changes happened because farmers stood together and refused to back down,” he said. “Welsh Labour MPs sat on their hands, backed this tax raid when it mattered, and even voted against efforts to scrap it altogether. Farmers across Wales will not forget that.

“It is deeply hypocritical for Labour to now welcome reforms they actively opposed. And even now, these changes are too little and too late for many family farms.”

Mr Kurtz warned that despite the higher threshold, many Welsh farms would still be caught by the tax, particularly in areas where land values are high but profit margins remain tight.

“This fight is not over,” he added. “Welsh Conservatives will continue to push for the full scrapping of this damaging tax. Farmers need a friend, and they will always have one in the Welsh Conservatives.”

The original proposals triggered widespread anger across rural Wales, with farmers joining UK-wide protests that saw tractors outside Parliament and warnings from farming leaders about the severe mental health impact of the policy.

FUW President Ian Rickman welcomed the changes, which he described as “a welcome early Christmas present for many farmers across Wales who have endured months of uncertainty and anxiety caused by the UK Government’s ill-thought-out changes to IHT.

He added “The Government’s initial proposals for IHT reform caused untold worry for farming families, and have seriously dampened confidence across the sector and wider rural economy, as farmers have feared for the long-term succession of their businesses.

“The FUW has consistently advocated for a fairer approach to inheritance tax reform, and has for the past year lobbied hard for the UK Government to change course and adopt a more proportionate approach. These calls have been matched by opposition parties, multiple cross-party parliamentary committees, and growing numbers of the Government’s own Members of Parliament.

“At a time of considerable uncertainty and volatility for farmers across Wales, the UK Government’s revisions to the tax threshold represent some much-needed relief.

“Though the FUW remains frustrated with the way the UK Government has approached these reforms, I would like to offer my thanks to Ministers in the Wales Office for their willingness to engage in dialogue with us on this issue to date.”