U-turn on inheritance tax for farmers ‘snuck out’ to avoid scrutiny, say Tories | Tax and spending

Ministers have announced “by stealth” that they have decided to make a U-turn on inheritance tax for farmers, the Conservatives said after the government revealed the decision in a press release two days before Christmas.

Shadow environment secretary Victoria Atkins has accused the government of trying to escape scrutiny over its latest policy U-turn, under which the tax threshold for inherited farmland would rise from a planned £1 million to £2.5 million.

The move was announced in a Department of Environment press release on Tuesday, after months of pressure from farmers, campaigners and some Labor MPs.

Atkins told Sky News on Wednesday morning: “This being revealed on Christmas Eve means that, of course, we haven’t had a chance to look at this properly in Parliament.

“It seems very strange that they sneaked this out the day before Christmas Eve.

“And what’s more, he was a Secretary of State [Emma Reynolds, the environment secretary] who announced it, rather than the chancellor. The Secretary of State just made a press clip yesterday. She didn’t even come out [broadcast media] today…explaining his policies to the nation.

“So they’re kind of trying to keep it under the radar once everyone’s distracted by Christmas preparations.”

Rachel Reeves first announced in last year’s Budget that she would tax inherited farming assets worth more than £1 million at a rate of 20%, removing reliefs in place since the 1990s.

The chancellor has, however, come under concerted pressure to reverse course, with farmers regularly protesting in Westminster and rural Labor MPs warning of the impact on their constituencies.

Dozens of Labor MPs are reportedly preparing to rebel against the government and support an amendment to the bill that would have introduced the tax, which is expected to be debated in Parliament next month.

Keir Starmer last week acknowledged concerns that some farmers were considering suicide over the changes – a concern also flagged in a recent report to the government by former National Farmers Union (NFU) leader Minette Batters.

Reynolds said on Tuesday the Government would increase the threshold for applying the tax from £1 million to £2.5 million.

Treasury figures show this will reduce the amount of money raised from £430m to £300m. Officials would not say where the extra money would come from, although the £130m foregone is only a small fraction of the £22bn headroom Reeves has under his own budget rules.

NFU president Tom Bradshaw said on Tuesday the announcement was a “huge relief to many”.

Atkins would not say whether the Conservatives would scrap the tax altogether if they win power in the next election.

“We need clarity from the Government on how this will apply. There will always be farms where – due to the investment and maintenance of the land by their fathers, grandfathers, grandmothers and great-grandmothers over generations – they simply won’t be able to pay that tax bill, even with this welcome turnaround from the Government,” she said.