In another U-turn from the government, the threshold for inheritance tax on farmers will be raised from an originally planned £1 million to £2.5 million, following months of protest and weeks of negotiation.
This will mean that roughly half the farms that would have been affected from April, when the new tax rules on inherited agricultural assets come in, will now be exempt.
The reversal, quietly slipped out while Parliament is in recess, “certainly does not radiate confidence from a government” with such a huge majority”, said Iain Watson, the BBC’s political correspondent. “The policies may have changed but questions over political judgment remain.”
And, welcome though this news may be to farmers, many will not be best pleased by the launch, only days before, of the government’s new Animal Welfare Strategy – which includes plans to ban pig farrowing crates, snare traps and trail hunting. With this continuing farmer drama, Starmer will have to answer claims that he is waging a war on country life.
What did the commentators say?
The original plan to set the inheritance tax threshold at £1 million “was a cock-up from the start”, said Tim Shipman in The Spectator. Designed to close a loophole that allowed enormously wealthy people to buy land to shield themselves from inheritance tax, it “quickly became clear” that it “did no such thing”. It reeked of “clever, clever Treasury number crunchers” obsessing over the sums, yet “ignorant of the politics”.
This climb-down from Labour is as an “early Christmas present” to ordinary farmers but, more pertinently, a “huge political U-turn, the latest of many, after months of digging in and insisting there was nothing to see here”. It seems the National Farmers Union “made a point of negotiating privately, rather than through the media megaphone”. This shows that “polite but firm negotiations can bear fruit”. Maybe the “militant doctors could learn a thing or two”.
The prime minister “came face to face with the mismatch between rhetoric and reality”, and finally understood the need to protect family farms, said Ben Riley-Smith in The Telegraph. What first seemed a simple loophole-closing move had “darker” potential consequences for elderly owners of smaller farms: a “financial incentive was effectively being created to die before” the change came in, “since the farm would then pass on tax-free”.
The plan was “yet more proof that Britain seems intent on limiting ambition”, said Adam James Pollock in UnHerd. And let’s not forget that there are still thousands of families affected by this new threshold, who are operating on “such slim margins” that paying inheritance tax would constitute an “existential threat”. These people “cannot take much more”.
The upcoming animal welfare reforms seem like yet another attack on country life, said Jamie Blackett in The Telegraph. In a purely political move, the government has announced its “imminent intention” to ban trail hunting. It is throwing “red meat to its backbenchers to distract from its catastrophic handling of the economy”. And how better to “galvanise a bit of class war” when it’s leaking support to the Greens?
In 2023, Starmer wrote of “his love for the countryside” and he gained some respect in rural areas, said the Countryside Alliance’s Tim Bonner in The Times. Given the Conservatives’ “strange determination to alienate” rural communities, countryside voters were “ready to give them a chance” in last year’s election. Now, with these animal welfare reforms and that “spectacularly stupid Treasury policy”, the “strategy for re-engaging rural voters” is “in tatters” – just like it was when Tony Blair banned fox hunting.
What next?
“We remain fundamentally against this tax,” said the National Farmers Union’s Tom Bradshaw in The Independent. Some family farmers, who may still reach the threshold, due to the value of their land, but have no cash in the bank, will be “caught” by the tax and forced to sell. At the next general election, “we will be asking all political parties to remove it from their manifestos”.
Labour strategists may think that animal welfare reforms could “soothe its angry backbenchers” and prevent voters from “flirting with the Greens”, said Bonner in The Times. But “they risk descending into a mire that even Blair could not talk his way out of”.
There’s an ‘early present’ for farmers but tensions between Labour and rural communities remain