Question to the Department for Environment, Food and Rural Affairs:

To ask the Secretary of State for Environment, Food and Rural Affairs, whether he has made an estimate of the number of farmers who will exit the sector as a result of the change to agricultural property relief in the Autumn Budget.

From 6 April 2026, the full 100% relief from inheritance tax will be restricted to the first £1 million of combined agricultural and business property. Above this amount, landowners will access 50% relief from inheritance tax and will pay inheritance tax at a reduced effective rate up to 20%, rather than the standard 40%. This tax can be paid in instalments over 10 years interest free, rather than immediately, as with other types of inheritance tax.

This is on top of all the other spousal exemptions and nil-rate bands that people can access for inheritance tax too. This means that two people with farmland, depending on their circumstances, can pass on up to £3 million without paying any inheritance tax. This is an assumption based on the £1 million limit and nil-rate bands and does not take into consideration the specific circumstances that may affect the tax calculation. Furthermore, if land is transferred 7 years before death, farmers pay no inheritance tax at all.

Data from HMRC and supported by the independent Office for Budgetary Responsibility (OBR) indicates that around 500 estates a year will be impacted. The majority of those will be able to adapt their businesses. The exact number will depend on a wider range of factors based on their individual circumstances.

With 73% of claims being for less than £1 million, the majority of estates will be unaffected, and they will be able to pass the family farm down to their children just as previous generations have always done. This is a fair and balanced approach that protects the family farm while also fixing the public services that we all rely on.