Farmers and local councillors in a community where 90% of land is agricultural have urged chancellor Rachel Reeves to rethink her inheritance tax plans. In a letter to the chancellor, they’ve proposed a series of alternatives that they argue would protect family farms.
Cotswold District Council has warned the government its inheritance tax (IHT) policy – which includes tightening the rules around agricultural property relief – risks being catastrophic for farms in the region, and urged it to adopt “pragmatic, farmer-backed alternatives”.
Agricultural property relief (APR) is a type of inheritance tax relief. It reduces the inheritance tax bill farmers and landowners must pay when farmland is passed to the next generation.
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In the 2024 Budget, Reeves announced that from 6 April 2026, the full 100% relief from inheritance tax will be restricted to the first £1 million of combined agricultural and business property. Above this amount, landowners must pay inheritance tax at an effective rate up to 20%, which can be paid in instalments over 10 years interest free.
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Cotswold councillor Jeremy Theyer, who is a working farmer, said the reforms could be particularly catastrophic for family farms. “It’s heartbreaking for farmers who have worked their land for generations to think their children might be forced to sell parts of it just to pay a tax bill,” he said.
‘This change will squeeze the typical family farm’
One farming family who could potentially be affected by the rule change are the Ackrills. Steph Ackrill is a fourth-generation farmer at Boyd Farm in Whittington. Steph’s family have been farming the land for more than a century, and she took over the farm from her father Ian Boyd.
Steph’s husband Fred Ackrill was part of the Cotswold District Council’s consultation. He said while he wasn’t unsympathetic to the concept of the tax, he believed it risked targeting the wrong farmers.
“As a small working farm, it's really difficult to make things pay,” he said.
“We've had to go into non-farming diversifications – an education centre, cabins for visitors to stay overnight, and even a fashion brand. We're really working hard just to make a living and make this a financially viable option for us.”
He said land prices were artificially high compared to the return that a farm can make, and he feared the taxes would negatively impact small working farms and push them into larger conglomerates.
“I really worry that this change will squeeze the typical family farm, and will prevent land being taken care of in the way that it always has been,” he added. “It'll force farms to be split up or to or to be sold.
“What I'd like to see is for the government to have another look at their figures. The inheritance tax limits are now so low that they attack small working family farms rather than just going after these tax loopholes, these larger wealthier individuals or corporations choosing to avoid tax.”
What are some potential alternatives to Rachel Reeves’ IHT policy?
In a letter, Cotswold District Council leader Mike Evemy told the chancellor he understood and supported the government’s intention to ensure a fair and effective tax system. But he said the council was concerned about “unintended consequences” the proposals could have on rural communities.
He said the proposals could cause “ruin” for farmers rather than reform, and called for a rethink.
The letter outlined alternatives designed to “protect family farms, support sustainable land management, and maintain the economic and environmental vitality of farms in Cotswolds and across the UK”.
The council’s proposed alternatives to the existing policy include:
- waiving inheritance tax land held in continuous ownership for at least seven years
- a “pay if you sell” capital gains model instead of taxing on death
- raising inheritance tax thresholds in high-value rural areas like the Cotswolds
- exemptions for farmers whose primary income is from farming or who are on recognised sustainability transition pathways, while maintaining the full 40% of IHT on landowners who are not farmers
- 100% inheritance tax exemptions for land leased to young tenant farmers to support generational renewal
Councillor Theyer said: “These alternative proposals – especially the idea of exempting farmers who are actively working the land or transitioning to sustainable practices – are the kind of policies that support farming families, along with the future of British agriculture.”
MoneyWeek has contacted the Treasury for comment.
