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Ending inheritance tax reliefs could 'tear apart' family farms and 'damage' food security.

Amid concerns that Sir Keir Starmer's Labour Government could change change agricultural property relief (APR) and business property relief (BPR), a new poll from the CLA has revealed 86% of respondents were ‘likely' that some or all of their land would have to be sold upon their death if inheritance tax reliefs are scrapped next month in the autumn budget.

Of the 500 farmers and landowners surveyed, less than 5% said it was ‘unlikely'.

READ NOW: Inheritance tax could 'devastate' future of family farms

More than 90% said scrapping reliefs will damage the UK's food security in the long run, while 5% said they did not believe the move would hit food security.

The CLA said APR ensures the continuance of farming after the death of the farmer, while BPR fulfils the same objective for other types of family businesses.

If there was no relief, or even if it was capped at £500,000 as some have suggested, there would be a high tax bill to pay.

With Defra statistics revealed that 17% of UK farms failed to make a profit and 59% made a profit of less than £50,000 in 2022/23.

The CLA said if inheritance tax was reduced by 5% in the number of businesses registered in rural areas, this could equate to over 27,500 businesses and potential unemployment of 190,000.

For an average family farm of 215 acres, without inheritance tax, 40% of the farm's land would need to be sold to fund inheritance tax liabilities.

Diversified farmers would be hit harder with farmers potentially needing to sell 46-54% of their farm's land would need to be sold.

CLA president Victoria Vyvyan said the poll had demonstrated the 'danger' of removing or curtailing reliefs during a 'crucial time' for the farming industry.

"This Government has promised economic growth but at the moment, in the rural sector, we are not feeling the love," Ms Vyvyan addded.

"There is a chill wind blowing through the tax environment and CLA members are very nervous that careful plans to sustain multi-generational businesses are about to be thrown to the wolves.

"The Government has said it won't increase taxes on working people.

"²ÝÁñÉçÇø are working hard around the clock feeding the nation and looking after the environment, and uncertainty over tax is one of the most pressing challenges facing the rural sector.

"Removing or even capping inheritance tax reliefs would have a major impact on the viability of family farms, jeopardising the future of rural businesses up and down the country.

"Many farmers could be forced to sell land to pay inheritance taxes, putting livelihoods, and the nation's food security, at risk, especially if the land is bought by corporates with deep pockets and no inheritance tax concerns.

"At a time of profound change in the industry, we need stability for our businesses while we adjust to new agricultural policies."

James Grindal, who farms in Leicestershire, has warned about the potential ramifications if inheritance tax is abolished.

"Scrapping APR relief would mean the death of my family farm," he says.

"Like many small farms, we survive on slim margins and would not have the funds to cover this hefty tax.

"I have spent years building a farm I can pass down through generations.

"It is not just a business, but a way of life, a culture and a legacy.

"To see that wiped out with one single tax bill would be devastating.

"As farmers, we want to feed the nation but cannot do that if we're forced to sell our land. Labour campaigned as the party of the countryside.

"This will be the first major test of whether they truly have our backs."

To provide rural businesses with certainty, allow them to forward plan and ensure agricultural land that is vital for food security and environmental objectives is not sold off, the CLA said the Government must ensure a stable tax regime by committing to retain APR and BPR in their current form.

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