The Commons Environment, Food and Rural Affairs Committee has called on the government to delay its planned rollout of Inheritance Tax reforms for a year, until 2027.
A report published today by the cross-party committee has advised that the government should delay announcing its final agricultural property relief and business property relief reforms until October 2026, to come into effect in April 2027.
The committee said this “would allow for better formulation of tax policy and provide the government with an opportunity to convey a positive long-term vision for farming” and protect vulnerable farmers who would have “more time to seek appropriate professional advice”.
Unclear impacts
MPs said they were concerned that policies announced in the autumn budget 2024 were made without adequate consultation, impact assessment or affordability assessment.
This means the impact of the changes is “disputed and unclear” with a risk of producing unintended consequences.
The committee also called on the government to consider alternative reforms before justifying its final approach.
The report also referred to a March 2025 survey of UK farmers that found that before the autumn budget 70% felt optimistic about the future of their businesses, but that number fell to 12% after the budget.
The survey also said 84% of farmers sampled feel their mental health has been affected by the autumn budget, with farmers citing the Sustainable Farming Incentive closure and changes to Inheritance Tax reliefs as the common areas creating concern.
This comes as several more farmers have taken their own lives in response to the government’s IHT policy, as was discussed in UK parliament this week.
“The government, however, seems to be dismissing farmers’ concerns and ignoring the strength of feeling evidenced in the months of protests that saw tractors converge on Westminster and up and down the country,” said Efra chair Alistair Carmichael MP. “We have seen that Defra’s communications with farmers have been poor, with confusing and sometimes contradictory messaging.”
Closing loopholes
The committee supported the government’s aim of reforming APR and BPR to close the loophole which allows wealthy investors to buy agricultural land to avoid inheritance, but note that other proposals were made that avoid harming small family farms.
It has called on the government to publish its evaluation of and rationale for following or not following alternative policy measures presented by stakeholders such as the Institute of Fiscal Studies and the NFU.
Read more: ‘Fury’ from farmer groups as Treasury ‘shuts door’ on alternative tax solutions
The committee warned that the government’s sudden closing of the SFI “affected trust in the government” and “left many farmers without funding they expected”.
This week the government announced it would allow SFI applications that were in progress within two months of 11 March to progress with restrictions.
The committee has called for alternative funding mechanisms to be put in place no later than September 2025 and that it should set out what its next iteration of SFI will look like and the date it will open for applications.
“The way in which the government has behaved over recent months has clearly negatively affected the confidence and wellbeing of farmers. Changes to APR and BPR in the autumn budget, the sudden closure of the Capital Grants scheme in November 2024, and the abrupt ending of SFI applications in March have all led farmers to feel that they cannot rely on the government to live up to its commitments.”
The committee has also said the government should urgently set out its vision for the farming sector.
Read more: Defra u-turns over controversial SFI closure following ‘error’
“Farmers ought to be the essential element in the government’s plans both to achieve food security and to restore and protect the environment,” said Carmichael. “When they make decisions for their businesses, farmers have to plan for the long term – but the landscape they are operating in currently is unclear.
“Farmers urgently need clarity, certainty and advance notice of changes – they cannot be expected to rethink their businesses on a whim,” he added. “It is essential that Defra focuses on rebuilding trust through good-faith communications with the sector.”
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