Question to the Department for Environment, Food and Rural Affairs:

To ask the Secretary of State for Environment, Food and Rural Affairs, what steps his Department is taking to help support people affected by changes made to (a) agricultural property relief, (b) Business Property Relief and (c) capital grants at the Autumn Budget 2024 in rural communities.

From 6 April 2026, 0% inheritance tax will be due on the first £1 million of combined agricultural and business property. Above this amount, landowners will access 50% relief from inheritance tax and will pay inheritance tax at a reduced effective rate up to 20%, rather than the standard 40%. This tax can be paid in instalments over 10 years interest free, rather than immediately, as with other types of inheritance tax.

This is on top of all the other spousal exemptions and nil-rate bands that people can access for inheritance tax too. This means that two people who share ownership of a piece of farmland, depending on their circumstances, can pass on up to £3 million without paying any inheritance tax. Furthermore, if land is transferred 7 years before death, farmers pay no inheritance tax at all.

Data from HMRC and supported by the independent Office for Budgetary Responsibility (OBR) indicates that around 500 estates a year will be impacted. The majority of those will be able to adapt their businesses. The exact number will depend on a wider range of factors based on their individual circumstances. It is not broken down to specific constituencies.

With 73% of claims being for less than £1 million, the majority of estates will be unaffected, and they will be able to pass the family farm down to their children just as previous generations have always done. This is a fair and balanced approach that protects the family farm while also fixing the public services that we all rely on.

As an outcome of the recent Spending Review, we have also committed £5 billion in the agricultural budget over the next two years – the biggest ever budget for sustainable food production and nature recovery in this country’s history. This enables us to keep momentum on the path to a more resilient and sustainable farming sector. In the first week of December, we paid £343 million into the rural economy, benefiting more than 31,000 farmers.

Any farmer or land manager who received Basic Payment Scheme (BPS) payments at least up until October 2022 in England is also eligible for support from the Farming Resilience Fund (FRF). The FRF provides free business support (and mental health support, where appropriate) to farmers and land managers in England to help them through agricultural transition. It does this by awarding grants to organisations who help farmers and land managers to understand the changes that are happening, identify how, what and when they may need to adapt their business models, and access tailored support to adapt. The support is offered free of charge to farmers and land managers by organisations known and trusted in the farming community. The support will run until March 2025.