Rachel Reeves could row back on hated inheritance tax raid for farmers in Budget

Rachel Reeves was urged to U-turn on her inheritance tax raid on farmers after reports that the hated policy could be tweaked. The Government is said to be looking at changes to the so-called "family farm tax" in order to reduce the impact on small farms ahead of November's Budget.

From next April, farmers - who were previously exempt from inheritance tax - will face a 20% rate on combined agricultural and business property worth over £1 million, or £3 million for couples. But the Conservatives, who have pledged to reverse the changes if they win the next election, warned that the proposals should be totally abandoned.

Shadow environment secretary Victoria Atkins said: "Labour's family farm tax is a disaster for the people who put food on our tables and for us all.

"The UK is already in a food and farming emergency with record farm closures and climbing food prices.

"It is not good enough for Rachel Reeves simply to tinker with this awful tax grab - she should drop it altogether.

"The Conservatives will axe the family farm and family business taxes because we will always stand with our farmers and family businesses."

Discussions by officials at the Department for Environment and Rural Affairs (Defra) have largely focused on increasing the £1 million threshold, according to the Sunday Times.

Sources told the newspaper that one option would involve raising the limit to £5 million, before the standard 40% inheritance tax rate applies over that amount.

It is understood that the department is drawing up proposals to submit to the Treasury ahead of the Budget on November 26.

Mo Metcalf-Fisher, director of external affairs at the Countryside Alliance campaign group, said: "There is huge opposition to the family farm tax, not only in the countryside, but among urban voters too.

"As evidenced by the Daily Express's Save Britain's Family Farm crusade, the current policy proposal is already causing crippling anxiety for so many farmers and it's blatantly obvious to everybody that the policy, as written, needs an urgent rethink.

"It's imperative the government communicate and work with the farming sector and rural experts to find a practical way forward, before it's too late".

Farmer and agricultural social media influencer Olly Harrison urged the Government to adopt proposals by the Centre for the Analysis of Taxation think tank which involve 100% inheritance tax relief for farms worth up to £5 million, or £10 million for couples.

He said: "It isn't perfect but I'm sure will save lives and farms immediately so it has to be a result."

The Chancellor has faced an ongoing backlash after announcing the plan to restrict the 100% inheritance tax relief for farmers in her Budget last October.

Campaigners have warned the changes, which have sparked a series of major protests, threaten family farms across the country and put UK food security at risk.

There have been reports of desperate farmers pushed to the brink of suicide by the controversial policy.

The exemption had allowed farms, which are typically asset-rich but cash-poor, to be handed down through generations without incurring a bill which could force them to sell off land.

Opposition parties including Nigel Farage's Reform UK and the Liberal Democrats have spoken out against the proposals.

The Government was urged to delay the reforms and consider alternative options by an influential group of cross-party MPs earlier this year.

A report by the Commons Environment, Food and Rural Affairs Committee said the changes were made without "adequate consultation, impact assessment or affordability assessment".

Ministers have defended the policy, insisting that most farms will not be affected and blaming the state of the public finances left by the previous Tory government.

The Daily Express has been campaigning for a U-turn with our Save Britain's Family Farm crusade.

Financial Secretary to the Treasury Lord Livermore said: "The Government believes its reforms to agricultural property relief and business property relief from 6 April 2026 get the balance right between supporting farms and businesses, and fixing the public finances and supporting public services.

"The reforms reduce the inheritance tax advantages available to owners of agricultural and business assets, but still mean those assets will be taxed at a much lower effective rate than most other assets.

"Despite a tough fiscal context, the Government will maintain very significant levels of relief from inheritance tax beyond what is available to others and compared to the position before 1992.

"Where inheritance tax is due, those liable for a charge can pay any liability on the relevant assets over 10 annual instalments, interest-free."