Welsh farmers and some politicians are urging the UK Government to delay the rollout of new inheritance tax rules that will affect farm families, saying ministers need to properly understand the consequences before the changes come into force. The call comes from the Welsh Affairs Select Committee, which has criticised how the government introduced the reforms and wants more time to assess their impact, especially on smaller agricultural businesses and rural communities.
Under the updated proposals, from April 2026, agricultural property and business assets worth more than £1 million could be subject to a 20% inheritance tax when passed on at death. This is a major shift from the long-standing position where qualifying farm land and assets could often be passed to the next generation without any tax bill.
Previously, Agricultural Property Relief (APR) and Business Property Relief (BPR) allowed many family farms to avoid inheritance tax altogether, recognising that farming assets are often tied up in land and equipment and do not generate the kind of liquid cash needed to pay tax bills. These reliefs were intended to help ensure farms could stay in family hands across generations and support food production and rural livelihoods.
Farmers in Wales and beyond have reacted with concern to the new rules. Many are livestock-based and operate on narrow margins, meaning they have very little spare cash even if the value of their land has risen substantially. Inheriting a large tax bill, they argue, is hard when people cannot pay their inheritance tax and could force families to sell parts of their land or assets just to meet the tax demand. Some farmers have described feeling “terrified” about the future of their farms because of the looming tax changes.
The Welsh Affairs Committee’s report highlights that official data on how many farms will be affected is patchy, and many smaller farms may be hit harder than the averages used by the government suggest. The Committee is not asking for the policy to be scrapped entirely, but for a pause so that a more thorough impact assessment can be done, particularly taking into account the unique structure of Welsh agriculture.
Why many UK farmers are unhappy about inheritance tax changes
Across the UK, farmers have voiced strong objections to reforms of inheritance tax reliefs that are due to take effect in 2026. For decades, agricultural property relief meant that family farms could be passed on without triggering a hefty tax bill, on the basis that farming is typically asset-rich but cash-poor. Land, buildings and equipment often make up most of a farm’s value, but they don’t generate enough liquid income to easily pay large tax bills.
Under the new rules, full 100% relief is limited to the first £1 million of qualifying farm and business property, and anything above that only gets 50% relief, resulting in an effective inheritance tax rate of 20% on the excess. While larger estates are expected to bear most of this extra tax, farmers argue many family farms will be caught because land values have risen far beyond what a typical farm business earns.
Many UK farmers fear new inheritance tax limits could force families to sell land to pay tax when passing farms to the next generation
For context, some industry bodies have estimated that more than 75% of farms in England and Scotland over 50 hectares could face increased tax liabilities under the reforms, because their assets exceed the new relief limits. This is a significant number of enterprises that might struggle to pay tax from the modest profits they make.
Campaigners also point out that if heirs have to sell land or farm assets to pay inheritance tax, it could break up long-standing family farms and disrupt rural communities. Some argue this risks harming the UK’s domestic food production and pushes the next generation away from farming. Others say increased tax bills could deter investment and weaken the sector’s competitiveness.
In response to mounting pressure, the government has since raised the threshold for full relief to £2.5 million of qualifying agricultural and business property, meaning married couples or civil partners might be able to pass on up to £5 million tax-free. This adjustment aims to protect more family farms, but critics say it still leaves many vulnerable to significant tax bills and does not fully resolve farmers’ concerns.
