Agricultural Property Relief and Business Property Relief

Victoria Atkins Excerpts

Monday 5th January 2026 Commons Chamber

[Victoria Atkins (Louth and Horncastle) (Con)]

(Urgent Question): To ask the Chancellor of the Exchequer if she will make a statement on the changes to agricultural property relief and business property relief.

[The Exchequer Secretary to the Treasury (Dan Tomlinson)]

I thank the shadow Secretary of State for Environment, Food and Rural Affairs for asking this question. I wish a happy new year to her and to all Members of the House.

The reforms announced in December go further to protect more farms and businesses while maintaining the core principle that more valuable agricultural and business assets should not receive unlimited relief.

The allowance for the 100% rate of relief for agricultural property relief and business property relief will be increased from £1 million to £2.5 million when it is introduced in April. That means that a couple will now be able to pass on up to £5 million of agricultural or business assets tax-free between them, on top of the existing allowances such as the nil rate band. Taken together with the reform announced at the recent Budget, widows and widowers will benefit from up to £2.5 million of their spouse’s allowance, even if their spouse passed away many years ago.

Our changes further reduce the number of estates forecast to pay more inheritance tax, and they further reduce the liability for many of the remaining estates. Compared with Budget 2025, the number of estates claiming APR—including those also claiming BPR—affected by the reforms in the coming tax year is expected to halve, from what would have been 375 estates to just 185 estates. That means that around 85% of estates claiming agricultural property relief in 2026-27 are forecast to pay no more inheritance tax on their estates under the changes.

The Government have announced these changes after listening carefully to feedback from the farming community and family businesses, and I am pleased that the National Farmers’ Union and others have welcomed the changes. Even after the reforms, the Government expect to raise around £300 million in 2029-30 from our changes to these tax reliefs. We are making fair and responsible choices to support the farming community, with a record £11.8 billion investment in sustainable farming and food production over this Parliament, and to modernise our tax system for the future.

[Victoria Atkins]

Thank you, Mr Speaker, for granting this first urgent question of 2026—and what a way to open the new year, with yet another Government U-turn. But where is the Chancellor of the Exchequer? This is her tax and her U-turn, and she should explain why she did not announce this at the Budget. Over the past 14 months, farmers, rural communities and the Conservatives have campaigned relentlessly in and out of Westminster against these vindictive taxes. This U-turn acknowledges what farmers have been telling the Government from day one: Ministers have got their maths badly wrong, and many more farms and family businesses will be broken up as a result of Labour’s higher taxes. Does the Minister accept that?

Why have the Government U-turned? Does it have anything to do with the recent Labour Back-Bench rebellion? Can the Minister tell the House how many family farms and non-farming family businesses will still have to pay this death tax? Are tenant farmers included, given that the now Chief Secretary to the Treasury admitted at the time that 14,000 tenant farmers were missed out of the Government’s original calculations? Can the Minister also confirm whether he signed the tax information and impact note for this U-turn before the Budget?

This partial U-turn does not save every family farm and family business. Indeed, for many the U-turn simply comes too late; we have seen record farm closures under this Government, and it has taken a great personal toll on many families. Given the pain, anguish, distress and, in some cases, sorrow that this cruel tax has caused families up and down the country, will the Minister now have the good grace to apologise on behalf of the Government to farmers and family business owners?

[Dan Tomlinson]

The Government announced the change in December because we had continued to listen to the representatives of family businesses and the farming community. I note that the National Farmers’ Union and others have welcomed the change, which will increase the threshold from £1 million to £2.5 million.

I think it is the right change to make, and it ensures that we get the balance right. We are still raising £300 million from the very largest estates. If the Conservatives would prefer not to raise that money and give a £1 million tax cut to an estate worth £10 million, that is their choice. It is not our choice. We think we have got to the right place on this policy and are striking the right balance—both raising revenue from those with the very largest estates, and making sure that we have a higher threshold. Because of the changes we announced at the Budget, someone in a couple will now be able to pass on up to £5 million.

I can confirm to the House that I did not sign the tax information note for the change that was announced on 23 December before the Budget. On the numbers, as I said, the number of estates affected who claim agricultural property relief—including those also claiming BPR—is expected to halve, from 375 to 185.