'Dreaded' new inheritance rax rules for farmers face being 'delayed'

Rachel Reeves has been warned her dreaded inheritance tax rules for farmers may have to be DELAYED. The new Labour Party government has been warned its new IHT shake-up and proposed changes to agricultural taxes risk treating some landowners unfairly.

Theycould impact food security if not mitigated appropriately, too. David Sturrock, senior research economist at the IFS, stated: “Current farm owners passing away in the next seven years (but after the new regime comes into force in April 2026) will not have had the opportunity to avoid inheritance tax by making lifetime gifts.

"If the government wished to give current farm owners the same opportunity to avoid inheritance tax as owners of other assets, it could, for example, make lifetime gifts of agricultural property made before a certain future date inheritance tax free, regardless of the timing of the death.”

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Ms Reeves is understood to be holding firm, aiming to target wealthy investors buying land to avoid inheritance tax—a practice blamed for driving up land prices. Tax expert Dan Neidle has conducted research suggesting the tax changes may hit working farmers harder than tax avoiders.

He proposes equalising the inheritance tax to 40% but making it payable only when the land is sold, thus avoiding impact on those wishing to pass the family farm to relatives. Neidle also suggests a “clawback” mechanism where inheritance tax relief is reclaimed if inherited farmland is sold within a certain timeframe.

Tim Farron, the Liberal Democrat environment spokesperson, commented: “The government hid behind the IFS to try and justify this disastrous policy. That very same organisation is now telling them that their own proposals need an overhaul.”

A Treasury spokesperson responded: “As the IFS has said, the existing rules for these reliefs are unfair and inefficient. We remain committed to fully implementing the policy and are not considering mitigations.”