The government says changes to inheritance tax will not affect the majority of farmers but many disagree
The government says changes to inheritance tax will not affect the majority of farmers but many disagree
Merseyside farmers feel the industry could be “destroyed” if new changes to inheritance tax are implemented. Danny Humphreys’ farm in Tarbock Green has passed down generations of his family, growing crops which feed people in Merseyside and beyond.
But many farmers like Danny say they are facing the end of their time in agriculture due to the measures announced in October’s Budget by Chancellor Rachel Reeves. Under the current rules, small family farms – including land used for crops or rearing animals, as well as farm buildings, cottages and houses – have been handed down through the generations without the need to pay inheritance tax under agricultural property relief (APR).
From April 2026 that will change. Tax will be payable for the first time on inherited agricultural assets worth more than £1m. As is the case for the rest of the population, there would be no inheritance tax payable on the first £325,000 above that limit, bringing the untaxed total to £1.325m.The tax due on the portion above that limit would be 20% – half the usual rate.
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Labour has argued that many farmers will not be affected by these changes. Environment Secretary Steve Reed has said: “Small family farms will not be affected. Only about 500 estates a year will pay more under the new scheme than they do today.”
Danny dismisses this, arguing the majority of farmers will be affected by these new measures due to the unique nature of agriculture. He says that, given farmers do not dictate the price of their goods, it’s far harder for them to make up for increased costs than businesspeople in other industries.
Danny followed in the footsteps of his dad Chris in working in this farm and wanted to keep up this tradition with his children, Arthur and Emily. Speaking to the ECHO, the 27 year-old said: “When I first heard about these changes, I was like, what are they doing? Since I was a kid, I wanted to be a farmer.
“I don’t feel like being a farmer anymore, simple as. You don’t want to invest any money. There’s no point in working. When my dad dies, I’m going to have to pay a fortune just to carry on and the money’s not there.
“With farming, you need all that money invested to make a couple of percent of profit. A window cleaner who has to spend £500 can make that back in a week’s work.
“We need millions to make hundreds. Everyone is in the same boat. In retail, you can deal with extra bills by putting the price up on another product. We can’t do that.”
Olly Harrison agrees. The 43 year-old, who is also from Tarbock, has been a leading figure in the national protests against these changes, which saw thousands of farmers take to the streets of central London earlier this month.
The government’s new rules roll together APR and business property relief (BPR) which used to give separate allowances for farmers. They could claim APR for their land, and BPR for all business assets such as farm machinery.
Olly said: “Farming is not like any other business – if there’s a change in costs, they can change the pricing structure to make up for it. If you’re making widgets, you’re able to put the price of the widgets up. In agriculture, we can’t do that.
“These changes will completely destroy agriculture. Every farmer is affected. Even ones that rent the land, they’ve got the BPR bill – with tractors and machinery being so expensive, you’ve got to pay tax on all that machinery. You’re lucky to make half of what you’ve invested.”
Some have argued farmers not having to pay inheritance tax is a loophole that needs to be closed, but Olly says that is not why it was put in place. He said: “It isn’t a loophole.
“It was brought in because it was damaging agricultural production and farmers can’t set their prices. Now the government has forgotten that and thinks they can scrap it.”
The government has added that it is fair that those with the broadest shoulders should pay more tax which will raise money for public services such as the NHS. However, Olly says much of the wealth of farmers is on paper.
While critical of Labour’s policies, Olly stresses that he feels many governments in recent years have failed to understand the realities of being a farmer. He says this disconnect is concentrated in the corridors of power, with even those in urban areas such as Liverpool understanding that the food they buy every day comes from farms, not shops.
Olly organises the Christmas Tractor Convoy every year, an event which is very popular with Scousers. The event sees dozens of tractors adorned with twinkling lights journey around the city to raise money for Alder Hey Children’s Charity.
If these changes are implemented as they stand, Danny fears it will affect his family for decades to come. Labour says farms worth £3m could end up being exempt because married couples are able to claim £1m each tax free as well as a family home worth up to £1m, but not everyone will feel this benefit.
Danny said: “We’re an arable farm that grows crops. We fill in gaps by doing other things such as fixing machinery. Farming alone won’t pay for what you need to live. You need to diversify. We’re out all day, sometimes until the following morning. It’s very hard, you fall into bed at the end of some days.
“I love it. But there’s this thing which has appeared – a massive tax bill. I’ll have to sell some of the farm to pay for it. This £3m tax thing – my dad’s divorced. You’re paying big figures.
“I’ve got two kids and was hoping to pass the farm onto them. I can’t see that now. I’m the fourth generation of my family to have this. My dad, grandad, great grandads, they all worked themselves to death and for what?”
Both say that, if farmers sell their land off, there will be a loss of jobs and the land will end up in the hands of huge corporations who won’t use it for farming, meaning less British food will be made in Britain. But people like Danny believe they will have no choice but to sell up.
He said: “There’s not much money. Any profit you make goes straight back into the farm. For the return we get off it, you’d be better off working in Tesco stacking shelves. Farming is finished. Farming’s over.”
