From April 2026, tax will be payable for the first time on inherited agricultural assets worth more than £1m.
Under the current rules, small family farms – including land used for crops or rearing animals, as well as farm buildings, cottages and houses – have been handed down through the generations without the need to pay inheritance tax.
As is the case for the rest of the population, there would be no inheritance tax payable on the first £325,000 above that limit, bringing the untaxed total to £1.325m.
The tax due on the portion above that limit would be 20% – half the usual rate.
However, if a farmer is married, they would be able to take advantage of the general exemptions which let them pass assets to their spouse tax-free, or to leave a main residence to children or grandchildren.
That could bring the total untaxed amount for a farming couple to £3m.
The government says the changes will only affect the wealthiest 500 farms each year.
However, the National Farmers Union (NFU) and the Country Land and Business Association (CLA) estimate that up to 70,000 farms could be affected overall.
Many farmers have said they feel “betrayed” by the changes, with protests taking place.
