Publication of IHT draft legislation: ‘Farming will be crushed’

The government has just outlined plans to hold a technical consultation on the draft legislation, including on inheritance tax, to ensure it “works as intended” before the next Finance Bill, which will take place in autumn 2025.

NFU explained that this is a common process in the development of a Finance Bill, but given the “appalling consequences” of this legislation, the union said it will be holding the government to account on every element of this policy.

A spokesperson for the union said: “The NFU has repeatedly provided evidence that the current policy does not achieve the government’s intentions of closing a loophole, protecting family farms, or generating as much revenue as it should. Nor do we agree that it is ‘not expected to have a material impact on food security’.

“On the other hand, the NFU’s ‘clawback’ solution would allow the Treasury to raise the revenue it seeks without tearing apart farming families or jeopardising domestic food production.”

‘This is a moment that demands listening, compassion and action’

Since the Budget in November 2024, swathes of MPs from all parties, including members of the government’s own backbenches, alongside county councils, farming and business organisations, the food supply chain and over a quarter of a million members of the British public have joined the call to stop the family farm tax.

Even the Office for Budget Responsibility and the government’s own EFRA Committee have highlighted the impact these reforms will have on vulnerable elderly farmers.

Throughout the summer, NFU members have also made their voices heard. At county shows across the country, thousands of letters and postcards were collected from farmers and the public to be sent directly to MPs – each sharing personal stories of how this tax will devastate their family farms.

NFU president Tom Bradshaw said: “At the heart of this battle are the elderly farmers who have devoted their entire lives to growing food for the country and supporting their rural communities. They should not become collateral damage.

“To see them face such uncertainty, knowing the legacy they and their families have worked hard for and grown could be ripped away by this tax, is heartbreaking. I cannot begin to imagine the fear many must be feeling right now – their homes, their livelihoods and everything they’ve worked for is under threat.”

Mr Bradshaw said that he has spoken directly to the prime minister and treasury exchequer secretary James Murray about the “disastrous” impact of this tax.

“Yet, despite our persistent efforts, chancellor Rachel Reeves still refuses to meet us to discuss our alternative ‘clawback’ proposal. The Treasury claims our solution will raise less revenue but is refusing to release the modelling on how it came to this conclusion,” he continued.

Mr Bradshaw added that the issue with the family farm tax goes far beyond farming. “The food and farming sector supports millions of jobs, fuels our domestic food supply and contributes billions to the UK economy. When you undermine farm businesses, you undermine a vital part of our national infrastructure. If this legislation goes ahead, it will unquestionably have devastating and irreversible impacts on the country, and it is so poorly designed that it will inevitably have to be changed in the future.

“The prime minister must now take his own advice and listen to the overwhelming evidence that the current policy will not work as intended. To ignore the consequences this tax will bring would be a betrayal of the very people who feed our nation. We cannot stand by and watch the backbone of the countryside be broken when there is a credible alternative being offered.

“This is a moment that demands listening, compassion and action. The government needs to sit down with farming representatives to find a solution that protects the future of our domestic food production – before it is too late.”

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‘Tax burden on businesses, not wealth’

Country Land and Business Association (CLA) president Victoria Vyvyan said that the ending of vital inheritance tax reliefs will “crush” farming and family businesses.

“But the Treasury remains deaf, blind and indifferent to the damage to the economy. The CLA has made clear and costed the consequences of this ideological folly: the loss of jobs and the reduction in GVA. Together the industry has offered a sensible alternative via the ‘clawback’ mechanism. The Treasury has given no reason for failing to consider an alternative.

“This is not an impact assessment; it reads like an amateur note from an arrogant government setting and marking its own homework and simply not understanding businesses and food security.

“To be clear, this is a tax burden on businesses, not wealth, delivered without consultation and with derisory engagement. Farmers and family businesses are the backbone of the economy and deserve to be heard by a government that seems hell-bent on pressing ahead, indifferent to the slow but inevitable train crash.”

READ MORE: East Anglia farmers meet with shadow minister: ‘We feel undervalued’

Review your situation

Mark Charter, head of estate management at Carter Jonas, added: “After months of protests and government lobbying, many farmers and landowners have been waiting to see if any concessions will be made in the implementation of inheritance tax reforms.

“Now the draft Bill has been published, we recommend that any farming families who haven’t already started reviewing the practical and legal implications of the legislation begin doing so quickly.”

Mr Charter explained that this should include business ownership, partnership agreements, and different structures that can be used for holding property in multi-generational families. Farmers and landowners should also discuss will planning, lifetime gifts, and life insurance.

“While this legislation will not come into force before April 2026, we cannot rule out the possibility of the government making further changes affecting tax planning in its October Budget,” he concluded.

READ MORE: NFU Cymru president urges PM to change IHT proposals ahead of L-Day

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