Inheritance Tax Relief: Farms

Debate between Manuela Perteghella and Helen Morgan

Monday 10th February 2025 Westminster Hall

[Helen Morgan (North Shropshire) (LD)]

It is a pleasure to serve with you in the Chair, Dr Murrison. I thank the hon. Member for South Norfolk (Ben Goldsborough) for opening the debate. It is the first time that North Shropshire has been in the top 10 constituencies in a petition—713 people have signed, which is not surprising when we consider that there are over 1,000 farms in the constituency, covering 62,000 hectares. It is one of the 20 most rural constituencies in the country. Producing food for the country is our main activity, not just through farming and the thousands of people who support those farms. Food production, storage and distribution are all major industries as well.

Farmers have had a tough time: incomes are historically low and farmers can ill-afford to pay inheritance tax when an estate sadly passes on. The Government estimate that 288 farms will be affected in North Shropshire. Even if that is not an underestimate, which we strongly suspect it is, that is a whopping 27% of the farms in my constituency—more than a quarter—that will have to sell off land rather than further invest in the rural economy. That is shocking.

[Manuela Perteghella (Stratford-on-Avon) (LD)]

This policy could force hundreds of family farmers in my constituency to sell their productive land. Does my hon. Friend agree that as well as causing uncertainty to tenant farmers, the policy undermines our ability to address the threat to food security, without discouraging those who land bank for tax purposes?

[Helen Morgan]

I agree with my hon. Friend, and will come on to that point in a moment.

I want to mention Robert, whose family has farmed a traditional mixed dairy and arable farm near Oswestry for 120 years. Their farm is valued at £6 million, which sounds like a lot, but their income is only £60,000 a year. Even if the £3 million dual relief that we have been told about by the Treasury applied, paying it off would wipe out their income for 10 years. In fact, they estimate their liability would be higher than that. It is not just traditional farms that are affected: rental businesses, nurseries, and horticultural businesses all fear that they cannot pass on their business at the time of death as a result of this ill-thought-through policy.

The Chancellor wanted to put wealthy non-farmers off buying land to avoid inheritance tax, but I reckon being charged 20% with 10 years to pay it off is a pretty attractive alternative to paying 40% now. With such a low threshold of £1 million, many small farmers will be left with a liability they simply cannot afford to pay because land does not translate to cash unless they sell it.

This tax does not achieve its mission at all. The idea that farms can survive it is not true. Years of being taken for granted by the Conservatives have left farms in a desperate state. Some 8,000 farms shut their doors last year—one in 25—and farm incomes have been dropping year on year. That is down to a number of factors, including soaring inflation, which is beyond the Government’s control, and the botched implementation of the sustainable farming incentive, which was not. The disastrous trade deals with Australia and New Zealand, and the comprehensive and progressive agreement for trans-Pacific partnership have set an alarming precedent, especially while the President of the United States is holding anyone who does not give him what he wants to ransom with trade tariffs.

The Government must protect the farming budget. We need our family farms to thrive: for economic growth, which is so crucial in rural areas; to produce our food; and to protect our environment. There is still time to reverse this disastrous decision. I urge the Government to listen to the valid concerns and to demonstrate their commitment to rural Britain. Let us axe this family farm tax.