Rachel Reeves has been warned a generation could give up farming as she defended her Budget inheritance raid.
The Chancellor faced fury after laying out a dramatic overhaul of reliefs that apply to agricultural and business property.
The Government wants to restrict the ‘generosity’ of APR and BPR for the ‘wealthiest estates’ from April 2026.
The first £1million of combined business and agricultural assets will continue to attract no inheritance tax.
But for assets over £1million, inheritance tax will apply with 50 per cent relief, at an effective rate of 20 per cent.
Appearing on the BBC this morning, Ms Reeves was played a clip of Rebecca Wilson, a fifth-generation farmer from Yorkshire.
Rachel Reeves has been warned a generation could give up farming as she defended her Budget inheritance raid
Ms Wilson said: ‘On paper our farm is a valuable asset. But farmers like us often work very hard for very low returns and we rarely have surplus cash in the bank.
‘Even using personal allowances, the Chancellor’s proposal could hit us with a tax bill of nearly £1million when my parents die.
‘How is the Chancellor going to ensure that my generation will keep on farming in light of the changes announced in the Budget?’
Ms Reeves told the Sunday With Laura Kuenssberg programme that ‘only a very small number of agricultural properties’ will be affected, although the National Farmers’ Union warned the reforms could force farmers to sell their family farms to pay the inheritance tax bill.
‘You can pass on without paying any tax, for most cases, a farm worth £3million,’ she said.
‘After that the tax rate for inheritance tax for agricultural property is 20 per cent compared to 40 per cent that everyone else pays, and you can pay that over a 10-year period interest-free.’
She added: ‘Last year only a very small number of farms would have been paying any additional inheritance tax.
‘I hope that Rebecca and her family will look through the details because, if the farm is owned by two people, you have £3million essentially tax-free and then the tax rate is a 50 per cent discount on everyone else and you would have 10 years to pay it.
‘So only a very small number of agricultural properties will be affected, but last year the benefits of agricultural property relief, 40 per cent of the benefit was felt by 7 per cent of the wealthiest land owners.
Appearing on the BBC this morning, Ms Reeves was played a clip of Rebecca Wilson, a fifth-generation farmer from Yorkshire
‘I don’t think it is affordable to carry on with a relief like that when our public finances are under so much pressure.
‘And, of course, farmers as well rely on good public services, whether that’s the NHS, our roads or our schools, and that money will be put back into improving our public services and putting our public finances on a firm footing.’
Minette Batters, the former president of the NFU, told Times Radio: ‘These are family farms that effectively, they are cash poor.
‘They are, yes, asset rich, but they will have to sell off land.
‘And the flagship for Labour seems to have been about dealing with wealthy investors who are buying up land.
‘It doesn’t deal with that issue, actually. And we’ve got people who are buying land, who aren’t even paying tax here.’
