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Changes to Agricultural Asset Taxation Could Undermine Farming Succession Planning, Sector Leaders Say
A senior executive at Marks & Spencer has warned that planned changes to the UK’s inheritance tax (IHT) regime could discourage young people from entering farming, potentially endangering generational continuity in the sector.
Speaking at the Royal Welsh Show, Steve McLean, Head of Agriculture and Fisheries at M&S, criticised the UK government’s proposal to impose a 20% tax on inherited agricultural assets valued over £1 million, effective from April 2026. While this represents a reduced rate compared to the standard 40%, McLean said the move would be “a clear deterrent” to the next generation of farmers.
Tax Relief Under Review
The proposed reform, announced by Chancellor Rachel Reeves in November 2024, involves significant changes to Agricultural Property Relief (APR) and Business Property Relief (BPR)—two long-standing mechanisms that have historically shielded family-run farms from punitive inheritance tax bills. These reforms form part of a broader effort to increase public revenues for investment in essential services.
A UK Government spokesperson defended the changes, stating that “three-quarters of estates will continue to pay no inheritance tax at all,” and that remaining taxpayers would benefit from the reduced 20% rate and the option to spread payments over 10 years interest-free.
However, Mr McLean argued that the agricultural sector should be treated as a special case, given its low profit margins and structural reliance on multi-generational ownership.
He warned that the loss of preferential treatment could undermine confidence among farming families, adding:
“We want a vibrant, viable farming structure where young people can make a good living and be proud of what they do. These tax changes threaten that goal.”
Sector Response: “Turmoil” Among Welsh Family Farms
Farming unions have expressed growing alarm over the proposed tax policy. Last month, one union said the reform had thrown many Welsh family farms into turmoil, especially those in the process of intergenerational succession planning.
The issue has become a flashpoint at the Royal Welsh Show, where policy discussions have focused heavily on farm viability, subsidy reform, and the future of rural economies.
Government Stands Firm
In response to mounting criticism, the government emphasized its £11.8 billion commitment to sustainable farming and food production across the current parliament. It also noted the appointment of Baroness Minette Batters, former NFU president, to lead a taskforce focused on boosting farm profitability.
Still, industry experts warn that increased taxation during ownership transitions could have long-term structural effects, especially at a time when the sector is already grappling with input cost volatility, climate pressures, and policy uncertainty.
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