Welsh farmers welcome inheritance tax U-turn
Welsh farming representatives have welcomed changes to inheritance tax rules for agricultural assets, saying the move will bring significant relief to many family farms.
The UK Government has confirmed the inheritance tax threshold for agricultural and business property will rise from £1 million to £2.5 million from April 2026, reducing the number of estates expected to be affected.
The change follows sustained lobbying by farming unions after proposals announced in the October 2024 Budget prompted concern across the rural sector.
Reacting to the announcement, Aled Jones, President of NFU Cymru, said the union and its members had spent more than a year campaigning to amend the original proposals.
He said: “Over the past 14 months NFU Cymru, and its members, have been tireless in their efforts to amend the proposals, culminating in the ‘NO IHT’ mosaic display at the Winter Fair on the eve of this year’s budget.
“Today’s announcement, which sees the tax threshold raised from £1m to £2.5m, is a major development which will take many Welsh family farms above the threshold for Inheritance Tax and will greatly reduce the tax burden for others.”
Mr Jones said the change, alongside measures announced in the Chancellor’s Autumn Budget allowing spousal transfers, would mean many families could pass on up to £5 million in qualifying agricultural or business assets before inheritance tax applies.
He added: “Today’s announcement alongside the changes in the November budget will be very welcome news to many Welsh family farms, coming as it does just before Christmas, a time when families come together.”
Welsh Government ministers also welcomed the announcement. The Deputy First Minister with responsibility for Rural Affairs, Huw Irranca-Davies, said the concerns of Welsh farmers had consistently been raised with the UK Government.
He said: “Our characteristic small and medium scale family farms play a crucial role in the economy of Wales by providing food, caring for our environment, supporting rural communities and helping to protect the Welsh language.
“We have always been clear that the concerns of Welsh farmers should be listened to by the UK Government, so we welcome this announcement.”
However, Conservative opposition figures said the change did not go far enough. The Conservative Shadow Farm Minister said Labour’s decision to raise the threshold was “welcome, but it has come far too late”.
They said: “Raising the Agricultural and Business Property Relief threshold to £2.5 million will protect more family farms and businesses from damaging inheritance tax bills, and it only happened because farmers and businesses stood up and refused to be ignored.
“For over a year, Labour pressed ahead with a policy the entire sector warned was wrong, creating anxiety, uncertainty and real harm to confidence in farming.”
The Shadow Minister added that concerns remained around the Sustainable Farming Scheme, bovine TB and the impact of Nitrate Vulnerable Zones on farm businesses.
Chair of the Welsh Affairs Committee, Ruth Jones MP, said: “The Government has listened to concerns and rightly raised the inheritance tax threshold; this is a win for Welsh farmers.
“However, as the Welsh Affairs Committee said in our November report, the inheritance tax reforms should be delayed until a Wales-specific impact assessment has been carried out, published and scrutinised. Ministers must recognise the distinct nature of farming in Wales. Declining livestock numbers, falling incomes, international pressures and mounting financial pressures – the situation is critical.
“We look forward to hearing how the Government’s rethink will impact farming in Wales, as we wait for the Government’s response to our report early in the new year. Let’s not waste any more time.”
[Photo: NFU Cymru]
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