The Prime Minister has told MPs that the “vast majority” of farmers will not be affected by changes to inheritance tax (IHT) announced in the Budget.
From April 2026, inherited agricultural assets worth more than £1 million (previously exempt) will be taxed at 20%, half the usual rate.
The National Farmers’ Union (NFU) called this “catastrophic” for family farms, saying it would “deprive the next generation of the ability to continue producing Britain’s food” and result in farmers being forced to sell their land to pay tax.
In her first appearance at Prime Minister’s Questions as leader of the opposition, Kemi Badenoch described the family farm tax as a “cruel family farm tax” and vowed to reverse it.
She called on Sir Keir to “reassure the farming community”.
Sir Keir said last week’s budget had committed £5 billion to agriculture over the next two years.
“This is the largest single increase”, he added, contrasting with the £300m he said was not spent by the previous Conservative government.
“On the issue of inheritance, the vast majority of farmers would not be affected, she knew very well; because they [the Conservatives] Everyone knows it,” he added.
The Prime Minister said Labor was “moving the country forward” through investment while the Tories were “stuck in the past”.
Later during PMQs, Conservative MP Sir Edward Leigh, the longest-serving MP in the House of Commons, urged Sir Keir to “be a good lawyer” and “listen to the evidence” if there was evidence that around 250 acres of small family farms will be hit hard by the tax.
“In a spirit of compromise, will he listen to the evidence, keep an open mind and perhaps be prepared to raise the bar on protecting our family farms?” Sir Edward asked.
The Prime Minister responded that the government was listening to farmers, with ministers meeting with the NFU on Monday, and taking a “fair and balanced approach”.
He reiterated that the “vast majority” of farms would not be affected.
Referring to the extra spending set out in the budget, he added that he grew up in a rural community and knew people in rural areas also needed “an NHS back on its feet… schools that children can go to, and schools that they can go to affordable housing for their families.”
Since its launch in 1984, Agricultural Property Relief (APR) Allows small family farms – including land used for crops or raising animals, as well as farm buildings, cottages and houses – to be exempt from inheritance tax.
Farmers have warned since the Budget that removing IHT exemptions would force many family farms into bankruptcy and devastate the countryside.
The government said it remained committed to supporting farmers and “the vital role they play in feeding our country”.
Chancellor Rachel Reeves said that in some cases the effective APR threshold could be around £3 million, with other IHT allowances also applying.
Paul Johnson, director of the independent think tank Institute for Fiscal Studies Already said The changes “will affect a very small number of the most valuable farms”.
“[Farms are] In fact, farms are still treated more generously than in past decades.
The Treasury estimates that 500 estates (including agricultural land) will be affected by the agricultural property relief reforms each year.
