Tenant farmers could face major financial fallout from looming inheritance tax reforms, prompting cross-party MPs to urge the government to rethink the plans and delay their rollout by a year.
The Tenant Farmers Association (TFA) has welcomed a new report from the Environment, Food and Rural Affairs (EFRA) Committee, which urges Labour to reconsider plans.
The changes, announced in the October 2024 budget, have sparked widespread concern across the farming industry, with warnings they could threaten the future of family-run tenancies.
In its latest publication, MPs who sit on EFRA recommend a 12-month delay in implementing the reforms - to April 2027 - calling for a full consultation to “prevent negative impacts on tenant farmers”.
The move follows evidence submitted by the TFA, which has warned that the changes could have unintended and damaging consequences for the sector.
TFA chief executive, George Dunn said: “The TFA is grateful to the Select Committee for listening to and taking on board the evidence we provided about the impact of the ill thought through changes.
“It is tremendously powerful that this report comes from a group of cross-party MPs, which indicates that these issues of concern transcend party politics.”
Mr Dunn said the government’s current proposals are “not fit for purpose” and risk doing “irreparable damage” to the farming industry.
While he acknowledged the government’s goal to prevent tax avoidance and raise revenue, he stressed the need for a more nuanced approach.
To support this, the TFA has put forward a range of constructive suggestions aimed at refining the policy while safeguarding the viability of farming businesses.
These include proposals to double the inheritance tax zero-rate threshold for Agricultural and Business Property Relief from its current level to £2 million.
The TFA also recommends that this zero-rate threshold should be made transferable between spouses and civil partners.
Additionally, the association suggests that elderly and terminally ill individuals should be given a shorter qualifying period to pass down their business assets to the next generation without incurring tax liabilities.
The TFA has also called for landlords who let land to tenants on secure agricultural tenancies or Farm Business Tenancies of ten years or more to be able to include the value of that land within their own inheritance tax zero-rate band.
Further proposals include amending the rules that reduce the availability of the residence nil rate band on estates valued above £2 million.
Mr Dunn said the TFA is willing to work with the government during this period, provided it leads to meaningful engagement and policy adjustments.
“There must be significant improvement in the level of engagement on this issue between the government and the industry," he added.
"We do not want to see our legitimate concerns simply put into the long grass with no dialogue and no change in the policy occurring."
The TFA also advocates for either the abolition or significant curtailment of Capital Gains Tax rollover relief for business assets, which currently allows wealthy individuals to defer tax when purchasing agricultural land.
