Family farms 'will be no more' without tax U-turn

The future of family farms is under threat if the government does not U-turn on recent changes to inheritance tax, farmers have said.

Since April, inherited farming assets worth more than £2.5m face 20% inheritance tax and dairy farmer Lynsey Awde, from Melmerby, Cumbria, said her family had invested heavily in their farm but that would not "be able to carry on".

Labour MP for Penrith and Solway Markus Campbell-Savours has joined calls on the government to remove the cap on tax relief for farms ahead of Wednesday's Budget.

The government said it had listened to farmers and protected small family farms, while ensuring the largest estates made a "fair contribution".

Ministers first announced a change in 2024, saying the threshold would be set at £1m.

They since raised it to £2.5m and said the allowance could be transferred between spouses and civil partners, meaning in some cases £5m of value is protected.

Awde said her family had spent hundreds of thousands of pounds on facilities including an anaerobic digester and a new calving shed.

She said the farm, which has 1,900 cattle overall and employs 17 people, would be well over the threshold for inheritance tax.

"We've continuously reinvested, for the animals' well-being, for the people that work on the farm's well-being," she said.

"That just won't be able to carry on."

Fellow dairy farmer Neil Young said his farm, which is owned by his father, was "on the threshold" for the tax.

He said he wanted to install new equipment at the farm near Wigton, including robotics for milking, but said it could leave him owing hundreds of thousands of pounds in inheritance tax in future.

He added not being able to invest would leave some farms struggling to survive.

"The big's just going to keep on getting bigger, and the smaller ones are just going to get squeezed out and the family farm is going to be no more," he said.

The government initially introduced the change because it said a small number of large estates were costing the taxpayer hundreds of millions of pounds a year.

Joe Wright, from tax reform campaigning organisation Tax Justice UK, said: "These changes were brought in for very, very good reasons, precisely to stop tax avoidance by the very wealthiest."

But he said farmers were being "priced out" of buying land by "wealthy people".

Campbell-Savours said a different approach could have targeted non-farmers buying farmland to avoid tax.

He said "inheritance tax on farms has seen investment drop" and called for a full U-turn by ministers.

The government said it had "listened to farmers" and raised the relief threshold "to protect small family farms, while ensuring the largest estates make a fair contribution".

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