Inheritance Tax Relief: Farms

Caroline Voaden Excerpts

Monday 10th February 2025 Westminster Hall

[Harriet Cross]

No, I do not know of any family farmer who has the sort of money to cover that bill. That is the issue. We are penalising the very people who have fed us, who have supported our rural communities and who have been custodians of the land for generations, to fit whatever the Government’s narrative is with this policy.

The unintended consequences also have impacts. There is an impact on hauliers, vets, rural communities, farm shops and workers—they will all be impacted by the policy. It is not just family farmers; they are the start, but the result of the policy spreads through rural communities the length and breadth of the country.

[Caroline Voaden (South Devon) (LD)]

In my constituency we did a survey of all the farmers to see whether the Government’s figures stood up. The Government claim that 73% of family farms will be unaffected by the change in tax relief, but 85% of the farmers who responded to our survey believed they would be affected, with an average inheritance tax bill of £637,000 because of the extortionate cost of land in South Devon. That is nearly £64,000 a year in tax every year for 10 years. Does the hon. Lady agree that this is unworkable, and will see the decimation of our family farms?

[Harriet Cross]

Absolutely. I agree 100% with what the hon. Member says, and it will be repeated across the country in rural Labour constituencies and in our constituencies. It does not matter where they are in the country, our farmers will face hundreds of thousands of pounds in IHT bills because of this Government’s decisions—for no other reason.

Some balance sheets might say one thing and the Treasury’s might say another, but the reality in rural constituencies up and down the country is that the policy will devastate our family farmers and rural communities. The Government must change course before it is too late.

--- Later in debate ---

[Caroline Voaden (South Devon) (LD)]

It is a pleasure to speak under your chairmanship, Dr Murrison.

I rise to speak on behalf of the 477 people in South Devon who signed the petition, which is almost exactly the same as the number of farms in my constituency. It is clear from the number of people in this room and the number of people outside what the strength of feeling is about a tax that has caused severe distress across the farming community, yet is expected to raise only around £115 million a year, which is less than 0.01% of Government spending, or less than 0.3% of the tax rises announced in the Budget. Does the Minister think it is really worth all the pain for that amount of gain?

We have talked a lot today about farmers. The rural economy is heavily dependent on farmers but goes much wider than just the farmers themselves. The impact of the change will be enormous in rural communities like mine. The knock-on effect will affect feed, equipment and machinery suppliers, agricultural engineers, the shops that stock high-quality local meat and vegetables, seasonal employment, and all those who benefit from the visitors who camp on farms or stay in farm-based holiday accommodation. I urge the Minister to think about that.

Farmers are key to tackling climate change and the nature crisis and are crucial to our food security, so why do we want to place them under yet more pressure after all the challenges they have already faced in the last decade, including the damaging trade deals, the poorly managed transition to environmental land management schemes, a botched deal with the EU that has limited their ability to export, higher input and energy prices, and of course floods?

This is a toxic mess for farmers, so we carried out a survey of all the farms in my South Devon constituency to find out exactly what the reality is on the ground in the face of this tax change. Of the farmers who responded to our survey, 85% believe they will be affected by the changes, and 90% of the farms are likely to be inherited by the direct descendants of the current owner. The average farm value is £4.15 million, with the highest being £15 million. The price of land in South Hams is among the highest in the country. Farmers did not cause those land prices to skyrocket. The influx of rich second home owners and the honeypot effect has done that, and farmers in my constituency are having to pay for it.

The average bill in South Devon will be £637,000. That is nearly £64,000 in tax every year for 10 years. That tax will not only decimate the family farms of South Devon but have a major knock-on effect on food production. One farmer said:

“The policy as it currently stands will halve food production in a generation.”

I have hundreds of quotes that I cannot read out, but I will cite a family whose farm has been in their family since the Domesday Book. They said they will have to sell at least 25% of the farm assets, which could mean that their children are unable to inherit a farm that goes back to the Domesday Book.

--- Later in debate ---

[Mike Wood]

Will the Minister give way?

[Caroline Voaden]

Will the Minister give way?

[James Murray]

I will make some progress and turn to the impact that the reforms will have on taxpayers, because there has been a lot of discussion of the impacts, and of the numbers that various Members have highlighted during the debate. As the Government have set out in recent months, in ’26-27 up to 520 estates claiming agricultural property relief, including those that also claim business property relief, are expected to pay more as a result of this change. That means that around three quarters of estates claiming agricultural property relief, including those that also claim business property relief, will not pay more tax as a result of the changes.