The Treasury has refused to entertain a compromise put forward by farming groups to soften the impact of inheritance tax reforms on the agricultural sector, despite growing pressure to reconsider the policy.
Farming leaders proposed a clawback mechanism that they said would generate similar revenues while protecting family farms from the levy, during a long-awaited meeting between Treasury officials and the industry.
The groups — the National Farmers’ Union, the Tenant Farmers Association and the Country Land and Business Association — have criticised the decision by chancellor Rachel Reeves to end decades of exemption from death duties for farmers in her October Budget.
But ministers told the groups the government would not row back on its proposed reforms, which the industry warns may threaten the UK’s food security.
“The reaction from our members is going to be one of fury, one of real anger, one of desperation that we’ve seen over recent months,” said NFU president Tom Bradshaw.
“We went to Treasury with a solution. We recognise the fiscal hole that the country faces,” he added. “But at the moment, the door is shut from Treasury.”
The clawback — first suggested by tax lawyer Dan Neidle of Tax Policy Associates last year — would see agricultural assets only attract the levy if they were sold within an agreed time period after inheritance.
This would better target wealthy individuals exploiting the tax relief, the groups argued.
“We have presented a compelling alternative but the government is deaf to the possibility,” said CLA president Victoria Vyvyan, adding that she believed the government’s decision to dig its heels in showed that the policy was “ideological”.
“I’ve really not wanted to think that this is ideology driven, but the money isn’t big enough to justify the attack on our industry,” she said.
One official briefed on Reeves’ thinking said the chancellor was determined to press ahead with the plan. “We have never suggested there would be mitigations,” the official said. “We strongly believe this is a fair and balanced deal.” The Treasury did not immediately reply to a request for comment.
The reforms mean that from April 2026 agricultural landowners will be subject to a 20 per cent levy on land above a threshold of between £1.3mn and £3mn, depending on whether they are married and if they own a home.
The decision has led to a significant political backlash, and energised the farming community.
Last week Prime Minister Sir Keir Starmer was forced to cut short a visit to a housing development in Milton Keynes after a group of farmers in tractors disrupted the appearance. During a tractor protest in London last week, Starmer insisted that “farming is top of the agenda”.
Opposition parties have slammed the reforms, and overwhelmingly sided with farming groups on the issue.
Following the meeting, shadow environment secretary Victoria Atkins said Labour “clearly didn’t care about rural communities”.
She added: “Contrary to the words that come out of Keir Starmer’s mouth, this is yet more confirmation that farmers are at the bottom of the list of Labour’s priorities.”
Liberal Democrat environment and rural affairs spokesperson Tim Farron said the government was “throwing farmers to the wolves”.
He warned that the “family farm tax could be the final nail in the coffin for many communities struggling to cope”.
Some of the government’s own backbenchers have also called for the reforms to be softened.
During a petition debate on the changes last Monday, Labour MPs proposed tweaks such as raising the farm value threshold, introducing an “active farmer test” to establish if the land was being used for agriculture, or creating a claw back system.