Farmers celebrate Sir Keir Starmer's Christmas U-turn on inheritance tax

Farmers celebrate Sir Keir Starmer's Christmas U-turn on inheritance tax The government has significantly increased the threshold at which farms will be subject to inheritance tax, which the Tories say is a "huge U-turn". Image:A skull hangs on a sign, as British farmers took part in a protest at Whitehall, calling on the chancellor to change course. Tuesday 23 December 2025 14:37, UK In a massive Christmas U-turn by Sir Keir Starmer, the government has announced a huge climbdown on inheritance tax on farmers. The tax relief on family farms handed down between families is to increase from £1m to £2.5m, meaning only farms worth more than £5m will pay. The climbdown, overturning bitterly unpopular proposals in Rachel Reeves's budget last year, follows a personal intervention by the prime minister. The National Farmers Union (NFU) president Tom Bradshaw revealed the government backed down after he had two "very constructive meetings" with the PM. Responding to the climbdown, Mr Bradshaw - who led a high-profile campaign which included tractors blocking Whitehall - said it would come as a huge relief. Tory leader Kemi Badenoch claimed it was a "huge U-turn" by the government and a big win for her party's campaign against Labour's "family farms tax". But the shadow environment secretary Victoria Atkins claimed it was only a partial U-turn on the "vindictive family farm tax" and was too late for some farmers. Businesses and lives had been lost, she said. Announcing the climbdown, Environment Secretary Emma Reynolds said: "We have listened closely to farmers across the country, and we are making changes today to protect more ordinary family farms. "We are increasing the individual threshold from £1m to £2.5m which means couples with estates of up to £5m will now pay no inheritance tax on their estates. "It's only right that larger estates contribute more, while we back the farms and trading businesses that are the backbone of Britain's rural communities." The U-turn was given a warm welcome by the NFU, which has led the relentless protests in Westminster and around the UK. Mr Bradshaw said Tuesday's announcement would "greatly" reduce that tax burden for many family farms He said: "Changes to Agricultural Property Relief (APR) and Business Property Relief (BPR) announced in last year's budget came as a huge shock to the farming community. "Until that moment, the best tax planning advice was to hold on to your farm until death and pass it on to the next generation who could continue to run a viable farming, food-producing business. "The original changes to APR and BPR, contained within the Finance Bill, resulted in a pernicious and cruel tax, trapping the most elderly and vulnerable people and their families in the eye of the storm. The NFU and its members have stood strong for what we believed in. "I am thankful common sense has prevailed and government has listened." The climbdown also follows a mini-rebellion in the Commons in early December in a vote on the inheritance tax proposal, when...

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