English On October 30th, the Government announced their Autumn Budget. Here we offer some reflections on the announcements included in the budget that will impact farming and land-use; including the farming budget, ELMS, and changes to Agricultural Property Inheritance Tax.
We’re pleased to see that Labour will not be axing the ELMS budget for England, but we’re disappointed that our demand for a doubling of the current farming budget for all four nations was not heeded; despite this being called for by a whole range of farming groups across the movement. Farmers all over the country and in all sectors are struggling to pursue secure and dignified livelihoods, and if the new government is committed to seeing a green transition in our farming and land-use system, then farmers and landworkers must be properly supported.
We’re also concerned that Labour have only committed to ring fencing the ELMS budget for one year, before review. In a time of great uncertainty, transition and volatile weather as a result of global warming, the farming community needs reassurance that there will be financial support available to them as they transition to more nature-friendly systems. The agroecological transition won’t happen overnight and we need long-term government commitment to support and reward farmers who are pioneering this work.
We’d also encourage the government to be more open to other non-budgetary policies which would support UK farming livelihoods, and to research opportunities for policy changes in the spheres of trade and market regulation. UK farmers are working hard to produce high quality food, but cheap international imports continue to undercut homegrown produce and push UK farmers and growers into further precarity. Labour should therefore consider measures such as stricter import regulations, taxes on the import of foods that could be produced seasonally in the UK, and regulating supermarkets to ensure fairer prices for farmers and consumers.
With regard to the changes to Agricultural Property Tax Relief, we acknowledge that this change may initiate a degree of worry and concern among some of our membership, but we also understand that this is a complex and nuanced topic that warrants further scrutiny and measures of support from the government.
“From 6 April 2026, the full 100% relief from inheritance tax will be restricted to the first £1 million of combined agricultural and business property.
Above this amount, landowners will pay inheritance tax at a reduced rate of 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 with farmland, depending on their circumstances, can pass on up to £3 million without paying any inheritance tax.”
For more information, see the UK Government announcement: What are the changes to agricultural property relief?
As a farming organisation with strong social justice values we believe in tax justice and the redistribution of wealth and land. Labour have argued that this change to inheritance tax relief will limit the incentive for wealthy estates to purchase agricultural land as a way of avoiding paying inheritance tax, and that it will also help to make land more accessible, as it will likely result in farms having to sell off portions of their land to cover their tax bill. In principle, the redistribution of land from large estates to smaller farms and new entrants is something that the LWA supports,* and we are encouraged by the fact that Labour are putting land justice on their policy agenda.
However, without proper regulation, these changes could exacerbate the risk of farmland being bought up and consolidated into larger land holdings, or taken out of food production by investors in Biodiversity Net Gain, carbon offsetting schemes or luxury developments. We therefore believe that further measures are needed in order to facilitate supportive, just and fair transitions where changes in farmland ownership occur, to ensure that new entrants and community-based groups are prioritised in any land sales, and that land remains under sustainable agricultural production.**
Furthermore, in order to safeguard the future of small farms, there is a need to explore alternatives to private property ownership. The government should therefore do more to enable and support alternative ownership models which have an emphasis on community, accessibility, and protecting land for agricultural and ecological use in perpetuity. Many of our members work to produce food on farms and projects which have alternative ownership models such as community land trusts and cooperative ownership structures.***
Overall, however, and despite its intentions, the use of inheritance tax in this instance risks being a blunt instrument for trying to influence the type of farming and land-use system we need in the future. Although it seems likely that in most cases where farms are owned by a couple, inheritance tax won’t apply to assets with a combined value of under £3million (see Example 1 yma for more detail), as it stands, this blanket approach won’t distinguish between industrial-scale farms who are turning huge profits, and small-medium scale family farms who use or are transitioning to more nature-friendly farming and land management systems. Nor will it reflect differences in land prices according to region and farming sector, which can vary significantly; from upland sheep farms in Wales, to Grade 1 arable land in Norfolk.
Not only could the indiscriminate application of this change to inheritance tax relief have negative impacts on some family farms who are already struggling to get by, but it also runs the risk of many smaller-scale tenant farmers being evicted, if their landlords decide to sell the land.
We also recognise the skills, experience and deep knowledge of a particular piece of land that farmers gain from growing up on a farm and participating from an early age in farm activities. The fiscal framework around farm inheritance therefore needs to balance skills retention with the creation of opportunities for new entrants and a more just distribution of farmland, alongside support for rapidly adopting more agroecological land management approaches.
We hope that Labour will consider the feedback given by farmers to the announcements made in the Autumn Budget, and explore the myriad of other policy options that are available to support the needs of small farms, food sovereignty, agroecology and land justice in the UK.
* However we also understand that under current subsidy support schemes small farms are currently a disadvantage, and the government urgently needs to address this and introduce more measures and market regulation mechanisms to support the viability of small farms. The Welsh Government’s Horticulture Subsidy System which recognises labour hours worked as well as area is one good example of this.
** One possibility could be for the government to financially support local councils to buy these plots of land and lease them out to new entrants at below-market rates; in line with the county farm model.
*** We would recommend reading this new report which explores models of community ownership.
Do you have thoughts, concerns, or ideas related to the new changes to Agricultural Property Inheritance Tax that you’d like to share with us?
We’d like to encourage Members to join the LWA Campaigns Team for an online ‘Deep Dive’ session on Tuesday November 26th, 5.30pm – 7.30pm.
Click yma to register.
