Government plans to impose inheritance tax on farms worth over £1 million have been watered down.
The incredibly unpopular move – which prompted demonstrations and Cumbrian Labour MP Markus Campbell-Savours to vote against his party, earning him a suspension – has changed from £1 million to £2.5m.
The change is due to come into force in April next year.
It allows spouses or civil partners to pass on up to £5m in qualifying agricultural or business assets between them before paying inheritance tax, on top of existing allowances.
Since the initial plan was announced in the 2024 Budget, the Government said it had listened to concerns of the farming community and businesses, which has led to the change.
The change will be introduced to the Finance Bill in January and will apply from April 6.
It said as a result:
- The number of estates claiming agricultural property relief (including those also claiming business property relief) affected by the reforms in 2026-27 halves from 375 to 185.
- Most estates will benefit, with inheritance tax cut by hundreds of thousands of pounds for many families.
- The number of estates affected by the reforms claiming only business property relief – excluding those holding only AIM shares – will fall by a third, reducing complexity and ensuring support goes where it’s needed most.
- Around 85% of estates claiming agricultural property relief in 2026-27, including those that also claim for business property relief, are forecast to pay no more inheritance tax on their estates.
Environment Secretary Emma Reynolds said: “Farmers are at the heart of our food security and environmental stewardship, and I am determined to work with them to secure a profitable future for British farming.
“We have listened closely to farmers across the country and we are making changes today to protect more ordinary family farms. We are increasing the individual threshold from £1m to £2.5m which means couples with estates of up to £5m will now pay no inheritance tax on their estates.
“It’s only right that larger estates contribute more, while we back the farms and trading businesses that are the backbone of Britain’s rural communities.”
He was the only Labour MP in the country to vote against the plans.
Cumbria’s other Labour MPs – Josh MacAlister (Whitehaven & Workington), Julie Minns (Carlisle) and Michelle Scrogham (Barrow and Furness) voted in favour.
Tim Farron, Liberal Democrat MP for Westmorland & Lonsdale, also voted against.
Lizzi Collinge, Labour MP for Morecambe and Lunesdale, abstained.
The Government’s plans were backed by the majority of MPs overall, with 322 voting in favour and 181against.
On December 3, Mr Campbell-Savours was informed he was suspended from the Labour Party.
Today, Cumbria Crack has received statements from Ms Minns and Mr MacAlister welcoming the Government’s new plan.
Mr MacAlister said he had been speaking to farmers, the NFU and other Labour MPs to take those views into detailed behind-the-scenes discussions with Government ministers.
He added: “These were serious, constructive conversations about getting this right – and they’ve made a real difference. The NFU has said that common sense has prevailed and that the government has listened, and today’s announcement reflects that engagement.”
Ms Minns said: “I have met with ministers and advisers to press for amendments since the initial changes were first announced, and I am pleased that my representations on behalf of local farmers have been heard.”
Cumbria Crack has asked both MPs why they voted for the initial bill for a £1m threshold on December 2, when Mr Campbell-Savours did not.
