Family farms across Scotland could face ruin if the UK government presses ahead with inheritance tax reforms, NFU Scotland has warned.
In a formal submission to HMRC’s consultation on the Draft Finance Bill, the union condemned proposed changes to agricultural property relief (APR) and business property relief (BPR), describing them as “severe and far-reaching”.
The government plans to impose a 20% tax on inherited agricultural assets valued over £1 million – half the standard rate – from April 2026.
Jonnie Hall, director of policy at NFU Scotland, said the reforms would do more harm than good. “The government claims its reforms are about fairness and sustainability, but the reality is quite different,” he argued.
“These changes, even before implementation, are creating uncertainty and fear across our industry. They pose a serious threat to the continuity of family-run farm businesses and will undermine domestic food production and the future of our rural communities.”
The union’s response disputes the government’s assertion that the measures are fair or effectively targeted. It cites analysis from the Centre for the Analysis of Taxation (CenTax), which found that more than half of farms—both owner-occupiers and tenants— would be hit with higher tax bills, compared with just one-fifth of non-farming landowners.
According to the same study, family-run farms would bear the brunt of the proposals, while diversified estates and landowners with only peripheral agricultural activity would escape the worst impacts.
Alarmingly, some 70 estates a year would be unable to cover their inheritance tax liabilities even after selling non-farm assets.
NFU Scotland has welcomed the CenTax report’s alternative suggestions, which it believes would raise equal or greater revenue while safeguarding family farms.
Among the options put forward are a ‘Minimum Share Rule’ to shield genuine farming businesses, and an ‘Upper Limit on Relief’ to cap the value of assets eligible for full relief. A combined approach, CenTax argues, could deliver nearly twice the Treasury’s projected returns without endangering farming livelihoods.
The union has also condemned the proposed introduction date of April 2026, labelling it “unrealistic and damaging”. It instead supports the House of Commons EFRA Committee’s recommendation to delay the reforms until 2027.
NFU Scotland further highlighted gaps in the government’s proposals, warning of damaging consequences for Scottish agricultural tenancies, food security, and farmers’ mental health.
The union accused ministers of being “out of touch with recent global realities” by claiming that inheritance tax changes would not affect food availability.
Hall added that succession planning is already under strain, with uncertainty fuelling anxiety among older farmers and their families.
“We’re not arguing against reform – we’re arguing for smart, fair, and workable reform,” he stressed. “There are better ways to raise tax revenue without undermining an industry that is vital to Scotland’s economy, communities, and national food security.
"If implemented as drafted, these proposals risk dismantling generational businesses and driving investment out of rural areas."
