Serious concerns have been voiced for the future of family farms after major changes to inheritance tax were announced by Chancellor Rachel Reeves.

Giving her Budget Statement in the House of Commons, Ms Reeves said agricultural property relief and business property relief will be reformed.

"From April 2026, the first £1m of combined business and agricultural assets will continue to attract no inheritance tax at all, but for assets over £1m, inheritance tax will apply with 50 per cent relief, at an effective rate of 20 per cent,” said Ms Reeves. "This will ensure that we can continue to protect small family farms, with three quarters of claims unaffected by these changes"

However NFU president Tom Bradshaw said the Budget "not only threatens family farms, but also makes producing food more expensive".

"It's been a disastrous Budget for family farmers, and especially for tenant farmers," he said. "The shameless breaking of clear promises on Agricultural Property Relief will snatch away the next generation's ability to carry on producing British food, plan for the future and shepherd the environment.

"It's clear the government does not understand, or perhaps doesn't care that family farms are not only small farms, and that just because a farm is a valuable asset it doesn't mean those who work it are wealthy."

Victoria Vyvyan, president of the CLA (Country Land and Business Association), said: “Labour has made repeated assurances over the last 12 months that it would not tamper with inheritance tax reliefs, and its decision to now rip the rug from under farmers is nothing short of a betrayal.

“This puts dynamite beneath the livelihoods of British farming, and flies in the face of growth and investment. We estimate that capping agricultural property relief at £1m could harm 70,000 UK farms, damaging family businesses and destabilising food security. In its attempts to raise more revenue the government will cause great damage, jeopardising the future of rural businesses up and down the country.

“Many farmers, operating on slim margins, will now face having to sell land to pay inheritance taxes. At a time of profound change in the industry, adjusting to new agricultural policies, the government is offering no vision for a positive economic future for us in the rural community. We will continue to argue the case for these vital reliefs.”

Andrew Entwistle, partner and head of valuations at North East and Yorkshire property and business advice specialist GFW, described the Budget as being more significant for the UK farming industry than Brexit.

“The proposed reductions in Agricultural Property Relief and Business Property Relief show a deeply limited understanding of the realities of family farming," he said. "Our view is that these changes will have a bigger impact than Brexit on the UK farming industry.

“The suggestion that most family farms won’t be affected because they aren’t worth over £1m is, frankly, unrealistic. Farmers are often asset-rich but cash-poor; with an average farm valued around £3m, we’re now looking at inheritance tax bills of approximately £400,000.

“These changes mean that nearly all family farm succession plans will need to be re-evaluated to protect the longevity of the farm and maintain financial stability for future generations. Business asset disposal relief will also see changes, which is likely to impact many farming and rural businesses."