Environment Secretary Steve Reed has admitted he U-turned on promises not to impose inheirtance tax changes on farmers amid fury at Labour’s announcement at last month’s budget.
Mr Reed told two farmers’ conferences a year ago that Labour had no plans to change inheritance rules, including Agricultural Property Relief (APR), which gives farmers a 100% exemption.
But Chancellor Rachel Reeves announced at last month’s budget that farms worth over £1m would have to pay 20% inheritance tax from April 2026, laying bare the party’s hypocrisy.
There was no mention of inheritance tax for farmers in Labour’s manifesto.
The Cabinet Minister said: “We inherited a £22bn black hole from the previous government, and the previous chancellor of the exchequer covered the scale of that problem up.
“So none of us knew how difficult the problem would be when we were coming into government.”
Asked at the Country Land and Business Association (CLA) conference if he intended to get rid of the tax break, Mr Reed said: “We don’t. We have no intention of changing Agricultural Property Relief (APR).”
He also told the National Farmers’ Union (NFU) he would not be changing APR.
The Environment Secretarysaid many farmers protesting in Westminster over changes to inheritance tax are “wrong” about the policy.
Appearing before MPs in the Environment, Food and Rural Affairs Committee, Mr Reed was told there are “a lot more than 500 (farmers) here saying they’re going to be affected” and asked whether they were wrong.
He replied: “Well, assuming these projections from HMRC, validated by the OBR and IFS, are correct then many of them, probably happily, are wrong because there are things that they can do to plan their tax affairs as most businesses or asset owners would do to limit their liability.
“The numbers I’ve heard bandied around are enormous and very, very frightening if people were to believe them.”
Mr Reed said figures being used by critics were based on Defra data on the value of farms “and then people have drawn a straight line to an inheritance tax liability, but you can’t do that, because ownership is much more complex than one person, one farm”.
He added: “Of course we want family farming to continue, just as it always has done.”
