SMALL family farms, the lifeblood of rural Cumbria, could disappear from the landscape forever due to Government plans to scrap tax relief, industry leaders warn.
Farmers argue that if they cannot afford to pass their businesses down to relatives, the family farm will ‘die out’.
The move has been met by a storm of fury in the farming industry, with leaders warning of ‘militant action’ ahead of a rally being organised later this month.
Cumbrian farmer and NFU Cumbria chairman, John Longmire, said the farming community has been left in ‘shock and despair’ following the budget announcement, and the consequences of changes made to Agricultural Property Relief and Inheritance Tax.
He said: “I’ve spoken to many friends and fellow farmers and it has been upsetting to hear their stories on how this will affect their lives and businesses.
“The plans to change APR and BPR need to be overturned for the sake of saving our farming industry.
“Following the announcement that the delinked payment will be significantly reduced, we are also calling on Defra to ensure that Sustainable Farming Incentive is fit for purpose and ensures farmers in Cumbria can continue to deliver high quality food and environment.”
He added farmers and growers in the county will come together as part of an NFU planned mass lobby on November 19 at Westminster to fight for the industry.
“We will look to meet them direct to ask if they support this family farm tax or if they will do the right thing for their farming constituents and support our call for it to be reversed.”
Despite the farming industry claiming they have been ‘betrayed’ the government said it was still committed to supporting farmers and “the vital role they play to feed our nation”.
In Labour’s budget, the Chancellor announced that, while there would continue to be no inheritance tax due on combined business and agricultural assets worth less than £1m, above that there would be a 50 per cent relief, at an effective rate of 20 per cent, from April 2026.
The Treasury claims that the changes to the agricultural property relief will only impact 500 estates each year, with smaller farms - three-quarters of estates - not affected.
However, the NFU disputes the figures and claims the move will hit capital-rich, cash-poor, family farms already facing the phasing out of delinked payments (formerly Basic Payment Scheme).
Julia Aglionby, of the Foundation For Common Land, said farmers, including those at home, felt ‘utterly beleaguered by poor treatment from Government over the past eight years’.
“From shocking trade deals, high agri-inflation, slow development of ELMs, labour shortages to unfair supermarket prices and now the accelerated phase out of BPS/delinked payments it is one thing after another. And of course the weather!
“The reform of APR and BPR comes as a further unexpected shock. Prior to previous budgets Matilda cried ‘Fire’ so often over the possibility of APR disappearing that no one believed it would actually come to pass. But last week significant changes were announced for those who die on or after April 6 2026.
But Julia appealed to the farming community not to be ‘alarmist’ but to ‘breathe deeply’ and take advice from experts.
“For the vast majority with good planning they can substantially reduce if not eliminate IHT liability. Do remember that the £1 million cap is per person not per farm. Also each individual can claim their personal IHT allowance of £325,000 plus £175,000 for their main residence. So a couple can claim £3 million if the farm is their main home. And perhaps now is the time to start handing on part of the farm to the next generation. As Roy Jenkins said, ‘Inheritance Tax is a tax on the lack of trust between parents and their children’. My view is in too many businesses, and on too much land, many excellent farmers are trapped in farming structures that hold back innovative ideas being given a chance to flourish. With the new regime a silver lining is succession will happen earlier allowing new ideas to develop.
“There will be lessons from non farming family businesses; we can all learn from sectors where succession is more openly discussed and the cheque book handed on earlier. It is shocking how many farmers in their 50s still do not have management control of the farm business.
“Change though is difficult to absorb and farmers have been used to the status quo for 54 years. I completely recognise that there will be a significant number of farmers where sudden death occurs and one half of a couple has died or they do not live long enough to pass on assets. This unnecessary hardship could be mitigated by transitional arrangements. Once the dust settles it might be advisable for Rt Hon Rachel Reeves to assess ways to avoid unintended consequences for the economy, food supplies and nature. There could be transitional arrangements easing the transition to the new tax regime, such as for trading farmers over 75 a two year period to put in place succession with a three instead of seven year period for the PET.
“Also the government would be wise to recognise in many of our National Parks and National Landscapes small scale farmers farm in very desirable areas where land and house prices are exorbitant as in the Lake District. These farm holdings are critical to commoning and landscape heritage. One option for the government to consider is heritage exemption subject to the owner of the farm continuing to be active graziers of this iconic landscapes.
Robert Craig, Cumbrian dairy farmer and RABDF chairman, said there was much that the government had got wrong with their recent budget.“Their gross misjudgment about the impact of the changes to agriculture property relief and business property relief, but also the overall anti-business sentiment of the budget.
“I see little to be optimistic about with this budget. It’s not encouraging me to invest to grow my business or employ more people and I’m sure I’m not the only one feeling this way. Unfortunately, our new chancellor has very little understanding of agriculture or an understanding of what drives business confidence to invest and grow. Few would argue against closing the obvious loophole in the way agricultural assets are treated for inheritance tax purposes, but setting the threshold so low it risks the viability of average family businesses is a huge risk.
"While with careful planning it is still possible to avoid huge tax bills the new changes will be particularly harsh on any farming businesses experiencing the sudden and unexpected death of a senior family member or where such happens before the seven years have passed since assets have been gifted.
“As far as the overall Defra budget, it has been confirmed the previous underspend will be carried over and re-purposed within Defra, and relief the overall budget has escaped being reduced although given recent inflation the current £2.4bn earmarked for agriculture does represent a real terms decrease in the overall budget. I fear agriculture may be seen as an easy target by the government, money is tight and rightly all government spending needs to be justified. But I also fear we’re approaching a critical tipping point in UK agriculture from which it becomes very difficult to recover.
Robert warned “Small family farming businesses in Cumbria are very marginal, many only surviving due to unpaid family labour that no other industry would tolerate. UK farming and food production need direction, vision, and leadership before it’s too late.”
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