Record Number of UK Farms Close After Labour Cuts Inheritance Tax Relief

A record number of British agricultural businesses have shuttered operations in the past year following the government’s decision to reduce inheritance tax relief for farming families. Data from the Office for National Statistics reveals that 6365 agriculture forestry and fishing enterprises closed in the last twelve months — the highest figure reported since quarterly records began in 2017.

The bulk of these closures occurred in the first half of the year. Rachel Reeves the Chancellor, announced significant cuts to inheritance tax relief for family farming in her October budget which came into effect soon after. Only 3190 new agricultural businesses launched during this period, resulting in a net loss of 3175 firms across the sector.

Victoria Atkins, the shadow environment secretary, criticised the government’s approach, stating that Labour’s tax policies are undermining rural economies and threatening generational enterprises. Atkins also noted that the rise in employer national insurance contributions has placed additional pressure on farm businesses across the country.

British farmers are simultaneously grappling with industry-wide challenges, including a poor harvest due to last summer’s drought and the impact of severe flooding the previous year. Rising fertiliser prices and persistent export difficulties following Brexit have compounded the difficulties faced by those in agriculture.

The latest tax changes will directly affect family farms beginning April next year. Farms with estates valued above £1 million will face a 20 per cent inheritance tax liability, in contrast to the 40 per cent rate levied on most other estates. Family-owned farms were previously exempt from inheritance tax, and concerns are now mounting that some will be forced to sell land to meet their tax obligations, given that many are asset-rich but cash-poor.

Tom Bradshaw president of the National Farmers’ Union stated that farmers’ confidence in the future of their industry is “rock bottom” as uncertainty grows. The Department for Environment Food and Rural Affairs reiterated its support for farming and food security, citing a £1.6 billion increase in UK farming profits last year. Measures are being introduced to cut costs and bureaucracy for food producers, and efforts continue to secure a better share of public procurement contracts for British farmers.