Labour MP calls for full U-turn on farm inheritance tax

A Labour MP has called on the government to scrap its farm inheritance tax reforms altogether as pressure continues to build over the impact on rural businesses.

Markus Campbell-Savours, MP for Penrith and Solway, urged ministers to deliver what he described as “one final U-turn” on changes to agricultural property relief.

The Countryside Alliance, which campaigns against the reforms under the banner of the “family farm tax”, said he was the first Labour MP to call for the policy to be scrapped completely.

Speaking to the Cumbrian News & Star, Campbell-Savours said: “It is time we pulled the stops out.”

He added: “As a starter for ten, the government must deliver on its farm profitability plans, reconsider the fertiliser tax but also deliver one final U-turn and scrap its plans to abolish agricultural property relief.”

Since 6 April 2026, 100% agricultural and business property relief has been limited to the first £2.5 million of qualifying assets.

Qualifying property above that level receives 50% relief, producing an effective inheritance tax rate of up to 20% on that portion. Unused allowance can also be transferred between spouses or civil partners, potentially giving a couple a combined £5 million allowance for qualifying assets.

The government had initially proposed a £1 million threshold before increasing it to £2.5 million in December 2025 following concerns raised by farmers and businesses.

Ministers say the changes are intended to make the system fairer, raise revenue for public services and continue protecting smaller family farms.

However, farming and rural organisations argue the higher threshold has failed to resolve concerns over the impact on family businesses.

Nearly nine in ten farming and rural family businesses surveyed have frozen investment because of concerns over the inheritance tax changes.

The Country Land and Business Association (CLA), which surveyed 700 rural family businesses, said respondents had cancelled or delayed spending on machinery, diversification projects, reservoirs and other improvements.

Of those that had cancelled investment, more than a third said they had shelved projects worth more than £150,000, while 64% had abandoned plans valued at more than £50,000.

The survey found 89% had paused investment, while nearly 85% said the £2.5 million allowance was not enough to cover the value of their business.

Almost half said they would have to sell at least a quarter of their land to meet an inheritance tax bill, while one in four said they could have to sell more than half, according to the CLA.

Campbell-Savours has previously rebelled against the government over the issue. He lost the Labour whip in December 2025 after becoming the only Labour MP to vote against the government’s plans in a Budget vote.

The whip was restored on 6 March 2026 after he spent just over three months sitting as an independent MP. His latest intervention goes further, calling for the remaining reforms to be scrapped altogether.

It comes amid wider criticism of the policy from other senior Labour figures.

Former Home Secretary Lord Blunkett described the farm inheritance tax policy as a “mistake” at the Countryside Alliance’s Campaign for the Countryside launch in September.

Former farming minister Daniel Zeichner has also acknowledged problems surrounding the policy. In a recent interview with Farmers Weekly, he said he had not known about the inheritance tax changes until after they were announced in the 2024 Budget and said the government should have foreseen the backlash they caused.

The Countryside Alliance welcomed Campbell-Savours’ latest intervention and urged other Labour MPs to follow his lead.

Mo Metcalf-Fisher, director of external affairs at the Countryside Alliance, said: “It’s clear to many rural MPs that farmers are having a tough time and the hated family farm tax is very much the elephant in the room, impacting decisions they make about the future.”

He added: “We welcome this move, and hope it will encourage others in the government to do the same.”

The organisation is calling for what it describes as a “rural reset” and says it has identified 27 government policies since 2024 that have negatively affected farmers, rural businesses and countryside communities.

These include the inheritance tax reforms, increases to National Insurance and policies affecting trail hunting, racing and game shooting.

Campbell-Savours’ intervention now adds to pressure from rural organisations and figures within Labour for ministers to revisit the inheritance tax reforms despite the concessions already made.