The Defra minister Steve Reed has told a Westminster committee that the vast majority farmers have nothing to fear over the implications of new inheritance tax changes. The London MP is sticking to the Treasury estimates that only 500 farms per year will be affected despite growing pressure from farming organisations to revisit the figures.

Speaking at a cross-party parliamentary committee the minister pointed out that the relief did not exist until 1992, stating, “Yet these intergenerational inheritances had happened in all the decades leading up to that point.”

At the same time as thousands of farmers were protesting on the streets of London against Labour’s autumn budget Mr Reed told the committee: “The best measure for what will happen is from the last year with hard data for claims of APR in 2021/22. HMRC and the Treasury were able to run projections and take into account different factors.

“Their projections show around 500, or probably fewer, estates would be affected by these changes in any year; the rest of the sector would not be. These figures have been validated by the Office for Budget Responsibility (OBR) and the Institute for Fiscal Studies (IFS). We have every reason to think this data is accurate, and the vast majority of farms will not be affected by APR. Around three-quarters of estates will not be affected, assuming no behavioural change.”

The Defra minister went on to point out that farmers are likely to take tax advice, which could reduce the figure even further. He continued to argue that the thousands of farmers protesting in London were ‘probably happily wrong’ in thinking they will be hit by the changes to APR and pointed out that there are steps they can take to limit their liability. Before clarifying that he would not be giving tax advice, he said: “The best thing to do is not to listen to a minister but listen to your tax advisor.”

When asked if the changes were fair, the minister replied that the best thing was for people to seek professional tax advice. He went on to say: “But I don’t think the public will think it unreasonable that people with multi-million-pound assets should pay inheritance tax in certain circumstances.”

The minister again explained that the incoming government had found a £22bn black hole in the public finances, which needed to be “plugged just to stand still.”

When quizzed on the impact of the budget on land values, Mr Reed explained that falling land prices could open up opportunities for more young farmers. He noted that more land is being bought by non-farmers and that values are rising at double the rate of inflation. He added that many investors are purchasing land to shield money from tax liabilities.

He was then asked if there would be any rolling back on the budget decisions, to which he replied: “The decision has been taken in this case. The thing I am picking up is that a lot of people who will not be affected by the changes currently believe they will be. It is important for those people to get advice; there is some signposting available from Defra. Businesses have tax accountants and advisors, and that will include farmers. It is important they speak to those people as well.”

On the £1m threshold, the Defra minister explained that, in many circumstances, the threshold for paying income tax will be £3m, which he described as “quite generous.” He added that this would be paid at half the rate of anyone else and could be spread over ten years. Overall, he felt it was a “generous package of support for people.”

When asked if it was fair to raise taxes on farmers who typically make small profits relative to their land values, he said: “I don’t think it is a very good argument to say that farmers who own sizeable and valuable assets in land but are not very profitable should not have to pay any inheritance tax, unlike nearly every other asset. The answer is not to accept low profitability in the sector, but to look at what we can do to drive profitability up in the sector.”

To increase profitability, he listed lowering energy costs, increasing public procurement of British produce, and making food and drink exports to the EU easier.