Why are farmers striking against the “tractor tax”?

Posted: 19 November 2024

Thousands of farmers are apparently said to be planning to protest against the new Inheritance Tax reforms which were introduced in the budget at the end of the October. Many are claiming that the new reforms will be detrimental to farming families and bring potential risks to the food supply change. In this post we look at the current policies and what the reforms are changing.

What is the current position?  

Since 1992, farmers have been able to apply for agricultural property relief (‘APR’) against their estates. This has meant that they have been able to pass down their farms, on their deaths, to the next generation tax free. They have also been able to apply for business property relief (‘BPR’) which can be up to 100% relief against their farming machinery and equipment.

APR was introduced to maintain our farming heritage and provide ongoing food security for the country.

It also recognised that whilst farmers may have large estates of land, farming itself, is not a well-paid, profitable business. It therefore provided for those who farmed the land, often because it has been in the family for a great number of years and is their legacy, to pass down the farmland without the burden of a large tax bill.

So, what is changing?

The change is being made to the way in which Inheritance Tax is applied to agricultural land.

From 06 April 2026, the tax-free relief (currently 100%) will be restricted to the first £1million. It will also be combined with agricultural and business property. Any estate in excess of this amount will be subject to Inheritance Tax at a rate of 20%.

The introduction of both a tax-free threshold and the amalgamation with BPR (when a combined harvester can cost as much as £500,000) means that many farmers are concerned that they will now face a substantial Inheritance Tax bill. They feel that they are being penalised unfairly in an already difficult industry.

It is reported that many have stated that, if the reforms do come in as intended, that they will have no choice but to sell all or some of their land and that, in doing so, it will be detrimental to not only their own livelihoods but also to the UK’s farming future and the whole food supply chain.

The Government disagrees and has stated that they believe that only 500 farming estates would be liable to the new tax.

Expert Estate Planning Advice

If you require more information on inheritance tax and estate planning, contact our Specialist Estate Planning Team. Call our Shoeburyness office 01708 298282 or Chelmsford Office 01245 493359 or send an email.