Changes in inheritance tax will be devastating for Welsh farmers

Ann Davies MP

As possibly the only Member of Parliament who milks the cows on a Monday morning before travelling to London, I can say that dealing with a herd of cattle is sometimes less frustrating than dealing with a herd of MPs.

I have been taken aback in recent weeks by the disregard the Labour government has for agriculture. A mixture of insensitivity to rural communities and a lack of understanding of how farming works mean that they fail to see the impact their policies will have.

Agriculture and farming play a very important part in Welsh society, not just economically but culturally and socially. Farming families are custodians of the landscape and language in Wales, with a high proportion of them living and working in the Welsh-speaking heartlands.

Support

Agriculture is integral to the Welsh economy, employing around 58,000 people. As the climate crisis leads to more food insecurity, supporting our farmers will be key to our future food security.

Despite the importance of farming and agriculture in Wales, this Labour UK Government have sought to undermine our farmers with the changes announced in the recent Budget.

An effective 20% tax rate on assets over £1 million may seem reasonable on paper, but as we know, most farmers are asset rich and cash poor and would be unable to pay this tax.

As I mentioned at PMQs last week, the average wage for an upland farmer in Wales is £18,600. The Prime Minister’s response did not fill me with confidence.

Devastating

About 30% of land in Wales is under some form of tenancy or let, with the majority being short term—of only a few years—under a farm business tenancy agreement. As far as I can see, the UK Government have not even taken these farmers into account, despite being at the sharp end of this tax.

The news regarding the changes in inheritance tax will be devastating to farmers, and the Government’s communication of it to the sector has been abysmal.

Farmers are also worried that Labour’s decision to apply the Barnett formula to agricultural funding, instead of a ringfenced addition, could severely reduce funding for Welsh agriculture.

This would reduce Wales’ share of agricultural funding from 9.4% to 5.6%. According to the FUW, that would see a cut of over £146 million. My Plaid Cymru colleague, Ben Lake MP, tried to get clarity from the Secretary of State for Defra, Steve Reed, but his response that consequentials “will work in the way they always work” showed he just didn’t get how Welsh agriculture funding has worked.

Trade deal

The election of Donald Trump in the USA has reopened speculation of a US-UK trade deal. The trade deal agreements we have had with Australia and New Zealand have undermined Welsh farmers with imports, and we must not allow Labour to repeat the Tories’ reckless decisions.

All Parliaments of the UK, including in Wales, should have a deciding say on any terms of future trade deals, particularly those that affect Welsh farmers.

The previous UK Government consulted to make the country of origin clearer on food labelling, so that customers could more easily buy British produce and support local farmers.

Now, with farmers under pressure from every direction, the Government must go further by ensuring that “Welsh” and not just “British” labelling is included to help customers who wish to support Welsh farmers when they are shopping.

Welsh farming isn’t just another industry—it’s the backbone of our rural communities, our culture, and our heritage.

If we’re serious about preserving our rural heritage and safeguarding future food security, we must back our farmers all the way.

That means fair taxation that respects their asset-rich but cash-poor reality, real protections against unfair trade deals, and clear, prominent food labelling that allows shoppers to actively support Welsh farmers when they choose Welsh produce.

Ann Davies was elected as Plaid Cymru MP for Caerfyrddin in 2024. She was born and raised in Llanarthne where she farms a tenanted dairy unit with her husband Gareth. She was elected as the Chair of the Carmarthen branch of the Farmers’ Union of Wales in 2023.