Farmers face new money troubles as Labour breaks promise on inheritance rules
British farmers got unexpected news about their land inheritance rules‚ with new £1m cap coming in about 18 months. Many farm-owners now need to re-think how theyʼll pass their land to next generation
Rachel Reeves made a quick u-turn on farmers tax rules‚ putting a £1m cap on tax-free farm inheritance (which starts in apr-2026). This means many farm-owners will pay 20% tax on anything above that limit
The numbers dont add up between different sides: while govt says its only gonna hit big farms‚ the National Farmers Union thinks about half of working farms might need to pay-up. Most farm-owners are land-rich but cash-poor — which makes this whole thing extra-hard
Here are main ways to deal with this tax-rule change:
- Give away land while still alive (but you need to live 7 more years)
- Split farm between family members
- Try getting heritage status for special places
- Get life-insurance wrapped in trust
Expert Toby Tallon from Evelyn Partners points out some big issues with these fixes — like you cant give away land and still use it without paying rent. The farm-splitting idea looks good on paper but new rules might block this work-around
Tax expert Aysha Marley suggests a wait-and-see approach until early-2025 when more details come out: “farmers should think about options but dont rush into decisions“. Its important to note that smaller family-farms (worth less than £1m) wont see any changes
The heritage loophole might work for some farms — if your land has special history or nature value; but you need at least £10k in a special fund and must let people visit your place. Banks might also look differently at loans now since farms have this new tax hanging over them
