Farm leaders push for Finance Bill amendments to safeguard tenancies

Farm leaders are urging the government to back key amendments to the Finance Bill, warning that failure to act could harm tenant farmers across the UK.

The Tenant Farmers Association (TFA) says further changes are needed to protect the tenanted farming sector following reforms to inheritance tax reliefs announced in the chancellor’s first budget in October 2024.

The warning comes ahead of the Finance Bill entering its report stage in the House of Commons on Wednesday (11 March).

The reforms relate to agricultural property relief (APR) and business property relief (BPR), which reduce inheritance tax liabilities on farmland and agricultural businesses.

TFA chief executive George Dunn said the organisation welcomed some adjustments already made by the government but warned that more action was required to prevent unintended consequences for tenant farmers.

“The TFA is grateful that the chancellor has taken on board two of our asks, by allowing spousal transfers of the new combined zero-rate band for APR and BPR and to increase the threshold of that combined band from £1 million to £2.5 million,” he said.

However, he said two further steps were needed to safeguard the tenanted farming sector.

One proposal is to exempt the inherited value of a joint agricultural tenancy from tax when one of the joint tenants dies.

He said the current rules could place an unfair burden on those inheriting such tenancies.

“Although the inherited share of an agricultural tenancy will have a theoretical value, it is not a value that can be realised by beneficiaries,” Mr Dunn said.

“Those who inherit a share of a joint tenancy have no means to capitalise on that and will have no way to liquidate the asset in the context of a continuing business to allow them to pay tax. This is inherently unfair and must be addressed by the government.”

The TFA is backing amendments tabled by Liberal Democrat MPs that aim to address the issue and is urging ministers to accept them when the Finance Bill returns to parliament later this week.

“The TFA is grateful to the Liberal Democrats for tabling a number of amendments to the Bill which would address this unfairness and the TFA urges the government to accept those amendments when they are debated,” Mr Dunn said.

The association has also raised concerns about the potential impact of the tax changes on long-term agricultural tenancies.

Restrictions on agricultural property relief could lead to landowners withdrawing land from the tenanted sector or offering only short-term agreements.

“Sadly, the planned restriction on APR is causing private estates to either remove land from the tenanted sector entirely, or to let only on a short-term basis so that the asset is close to hand if an unexpected tax bill arises,” Mr Dunn said.

The association warns the number of farm tenancies has already been declining.

Government figures in a recent Defra bulletin on farm rents show the number of Farm Business Tenancies has fallen by around 10,000 since 2018, including a six per cent drop between 2024 and 2025.

Mr Dunn warned the inheritance tax reforms could accelerate that decline.

“With the government’s own statistics showing that the number of Farm Business Tenancies has reduced significantly, we fear that the changes to APR will accelerate this,” he said.

The association also supports amendments tabled by Conservative MPs aimed at strengthening long-term tenancy arrangements.

“The TFA is grateful to Conservative MPs for tabling a number of amendments which will address these dangers, and we would urge the government to look positively at them,” Mr Dunn said.

The TFA has written to the chancellor highlighting the urgency of the issue and urging ministers to act before the legislation progresses further through parliament later this week.