Tue, 23 Dec 2025

Tue, 23 Dec 2025 Government waters down inheritance tax plan for farms

The government has now said it will lift the intended threshold from £1m to £2.5m.

* The government has watered down its proposal to tax inherited farmland, increasing the threshold from £1m to £2.5m.
* The change follows months of protests by farmers and concern from some Labour backbenchers.
* Environment Secretary Emma Reynolds said the government had listened to farmers and made changes "to protect more ordinary family farms".
* The new proposal means that a couple can pass on up to £5m in qualifying assets to their spouse tax-free, with a 50% relief applied to remaining assets above the threshold.
* The change is estimated to cost the government £130m and will reduce the number of estates expected to pay more inheritance tax from around 2,000 to 1,100.
* Labour MPs have welcomed the climbdown, but some have expressed concerns that the timing was "bizarre" and that many MPs were made to vote for the original proposal recently.
* Conservative leader Kemi Badenoch has said that "this fight isn't finished" and that other family businesses will still be affected by the tax.
* Liberal Democrat spokesperson Tim Farron MP has demanded that the government scrap the unfair tax in full.
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