Suffolk's farmers await update on inheritance tax

With just over a week to go until the spring budget, farmers across Suffolk will be waiting to see if there are any more updates on the proposed inheritance tax.

What's the significance?

In the Autumn budget of 2024, Chancellor Rachel Reeves announced reform to inheritance tax around farms.

The significance of this is that Agricultural Property Relief (APR), has been around since 1984 and allowed land used for farming to be exempt from inheritance tax, meaning land owners such as farmers did not have to pay tax on their assets under certain conditions.

According to the government website, agricultural properties that qualified for Agricultural Relief include...

• Land or pasture that is used to grow crops or to rear animals
• Growing crops
• Stud farms
• Trees that are planted and harvested at least every 10 years (short-rotation coppice)
• Land not currently being farmed under the Habitat Scheme
• Land not currently being farmed under a crop rotation scheme
• The value of milk quota associated with the land
• some agricultural shares and securities
• Farm buildings, farm cottages and farmhouses

Some agricultural property does not qualify for Agricultural Relief, including:

• Farm equipment and machinery
• Derelict buildings
• Harvested crops
• livestock
• Property subject to a binding contract for sale

More information on what qualified for Agricultural Relief can be found here.

Changes to this tax

However, the announcement made by Rachel Reeves means that, from April 2026, land owners will now have to pay the tax at a rate of 20% for properties worth over 1 million pounds, payable in instalments over 10 years interest-free.

This is still in contrast to the standard rate of inheritance tax of 40%.

The Government confirmed that the valuation of the property would include things like farm vehicles, farm tools and livestock amongst other things.

Why has the inheritance tax changed?

The Government claim that bringing in the inheritance tax now will stop wealthy landowners from buying up the property to avoid the tax.

Speaking to our political correspondent, Rachel Reeves said: "73 per cent of the farms will pay absolutely no more inheritance tax under the plans we've brought in.

"Some of the biggest land owners and larger farms will have to pay a bit more, but even for them it'll be half the rate that middle class families face at just 20 per cent.

"I think this is a fair package, protecting smaller, family farms, but asking some of those bigger land owners to pay a bit more in tax."

However, farmers in Suffolk have raised concerns, believing the Government have underestimated the amount, and size, of farms that will be impacted by their changes.

Farmers in Suffolk

Glenn Buckingham is the chair of the NFU in Suffolk he tells us farmers are already struggling and this tax is only adding to the pressure they're facing.

"There's a lot of anxiety

"They do not realise the challenges that agriculture has today, they are increasing and not reducing and that is a fundamental part of this problem.

"There needs to be a reconnection and a revaluing of what we do for society and the government needs to acknowledge that we've had a lot of inflation in input prices, which as price takers you're not always able to manage, so you're taking prices that are accepted in the marketplace, which we don't have control over and the variability of the weather.

"Farm margins are being squeezed all the time, many other things are happening, there's national insurance, double cap pick up truck tax, minimum wage and then the carbon border adjustment tax coming in.

"They all seem to be more intense at the moment.

"...There will be people who say I don't mind I could afford to pay a tax, but the threshold is far to low it is not protecting the family farm.

"If the farm does not have a good succession plan in place, then in ten years you're probably paying half your profits away to the government in the inheritance tax."

"It will bankrupt the family farm"

Many Farmers in Suffolk agree with Glenn.

John Watt is a beef and arable farmer from Laxfield, he is also a member of the NFU, he said:

"The biggest issue by miles is uncertainty in government policy, they just do not understand how long-term this industry is.

"You plan crop rations for five years, you have cattle in your herd for 13 years, and they do not think of that.

"It will bankrupt the family farm.

"We've already got small family businesses that were struggling to make a profit anyway, they're now facing an enormous tax bill.

"It's just going to cripple the businesses meaning they cannot afford to invest in better equipment and improve their methods.

"The farms will be sold and broken up and then you loose the food that business produced."

John is a tenant and contract farmer, meaning he does not own the land he farms on as a result, he has even less control over the future of his farm.

"If that land has to be sold, I lose my tenancy overnight and if I lose my tenancy, I lose my businesses overnight."

Defra - Department for Environment Food and Rural Affairs

A Defra Spokesperson said: "Our commitment to farmers is steadfast.

"We are going further with reforms to boost profits for farmers by backing British produce, reforming planning rules on farms to support food production, and making the supply chain work more fairly, while tackling the mental health crisis in our farming communities by investing billions of pounds and recruiting 8,500 mental health professionals across our NHS.

"Our reform to Agricultural and Business Property Relief will mean three quarters of estates will continue to pay no inheritance tax at all, while the remaining quarter will pay half the inheritance tax that most people pay, and payments can be spread over 10 years, interest-free. This is a fair and balanced approach which helps fix the public services we all rely on."

This week we'll be taking a closer look at both sides of the argument and what the inheritance tax means for both farmers, and the Government.