The secretary of state in charge of rural affairs, Steve Reed, has admitted he has changed his stance on farm inheritance tax because of the “£22bn black hole left by the Tories”.
When he was shadow DEFRA secretary, Mr Reed told two farmers’ conferences a year ago Labour had no plans to change inheritance rules, including Agricultural Property Relief (APR), which gives them a 100% exemption.
In the budget last month Chancellor Rachel Reeves announced farms worth over £1m would have to pay 20% inheritance tax from April 2026.
There was no mention of inheritance tax for farmers in Labour’s manifesto.
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As farmers descended on Westminster in protest against the change, Mr Reed admitted he had changed his stance since last year.
“We inherited a £22 billion black hole from the previous government, and the previous chancellor of the exchequer covered the scale of that problem up,” he said.
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“So none of us knew how difficult the problem would be when we were coming into government.”
He said it is “only right” to ask the “wealthiest landowners and the biggest farms to pay their fair share”.
Earlier, policing minister Dame Diana Johnson denied Labour had broken a promise.
She told Sky News’ Breakfast with Kay Burley programme: “I’m not sure we particularly set out a promise around this issue.
“I think the chancellor’s been very clear that she is not breaking promises that she made in the manifesto.”
When she was told Mr Reed said last December he would not change the rules, Dame Diana said: “Well, I don’t accept that.”
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Labour have said they are imposing the tax because wealthy landowners are using APR to avoid paying inheritance tax.
The National Farmers’ Union (NFU) and the Country Land and Business Association (CLA) both reported in November and December last year Mr Reed had ruled out scrapping inheritance tax relief for farmland.
Asked at the CLA conference if he intended to get rid of the tax break, Mr Reed said: “We don’t. We have no intention of changing APR.”
He also told the National Farmers’ Union (NFU) he would not be changing APR.
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Asked if Mr Reed had told the NFU that, the group’s president, Tom Bradshaw, told Sky News: “He did. He stood here a year ago at a conference in London, and said that the government would not be changing agricultural property relief.
“This industry has been betrayed.”
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Row over how many farms will be affected by inheritance tax
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The government and farmers have been engaged in a row over how many farms would be affected, with the Treasury saying 73% of farms would not be included, based on past claims.
However, the NFU said the Treasury has not included business property relief (BPR), which farmers can also currently claim, and two thirds of farms will actually be affected.
Shadow environment, food and rural affairs minister Victoria Atkins told Sky News: “What worries us is that, in the way that this policy has been designed, it will have the exact opposite effect of what they’re trying to achieve.
“It is tenant farmers and farmers in the middle who are going to be broken by this.”
