Derbyshire County Council’s deputy leader who was among the first to raise concerns after the Government’s Autumn Budget announcement to impose Inheritance Tax changes upon farmers fears the decision could destroy the viability of small farms and pose a threat to food security.
Cllr Simon Spencer, who is also the Cabinet member for Corporate Services and Budget at the Conservative-led council, believes the Government has failed to address or support farmers after committing to the biggest overall budget tax increase in many years.
He has raised concerns the Labour Government’s decisions to increase Capital Gains Tax and especially Inheritance Tax will be deeply felt by the farming community and he even described the issue as potentially ‘the biggest story from the budget’ before thousands of farmers descended upon London in protest on November 19.
Cllr Spencer, who oversees rural Dovedale, said: “Small farm communities do not have stacks of cash and they are living hand-to-mouth on many occasions.
“What the farmers tend to do is they are building a business for the future with a legacy for family to pass on.”
He added the imposition of the new Inheritance Tax policy upon farmers could ‘destroy the viability’ of small farms with farms having to be broken up to pay a tax farmers have never had to pay before making farms unviable and he believes this will eventually pose a threat to food security for all.
The new policy is expected to be introduced from April, 2026, with a starting point upon inherited agricultural assets worth more than £1m which were previously exempt but will now become liable to a 20per cent Inheritance Tax.
But if a farm’s assets amount to up to £1.325m, no Inheritance Tax will be paid and if a farmer is married their spouse can also pass on another £1.325m tax-free, totalling £2.65m.
Also, there is a £175,000 tax-free allowance on a main residence if it is passed to children or grandchildren which means a farming couple could have an untaxed amount of up to £3m.
But farmers have argued they are already facing increasing costs and although some may be regarded as asset-rich with land and livestock many argue they are cash-poor and changes to Inheritance Tax will mean they will have to sell-up.
National Farmers’ Union President Tom Bradshaw described the tax changes as destructive as about 1,800 NFU members lobbied MPs at Parliament before a mass protest march in Whitehall, London.
Prime Minister Sir Keir Starmer clams the vast majority of farmers will not be affected and the Government claims the Inheritance Tax change will only affect the wealthiest 500 estates each year but the NFU and the Country Land and Business Association have estimated that 70,000 farms worth over £1m could be affected.
Sir Keir Starmer has also said the overall budget will see investments in other areas affecting farmers including hospitals, schools and housing.
He also claimed that £5bn has been pledged over two years for farming and food sustainability and despite calls from protests the Prime Minister says the Government will not reconsider the new Inheritance Tax policy.
Derbyshire County Cllr Simon Spencer said farmers do not have a lot of money and in most cases their business is a family one handed down from generation to generation but if they get hit by Inheritance Tax their land may have to be sold and that will also threaten food security for the country.
He added: “The attack on farmers is something that has been coming for many years and it is an ideological approach to how landowners are seen by the Labour Party.
“A small family farmer and a wealthy landowner are not the same and the Government thinks they are.”
Conservative Party Leader Kemi Badenoch has pledged to reverse the policy and Liberal Democrat environment spokesperson Tim Farron has described the policy as ‘cruel’ and has said the only way to pay this Inheritance Tax would be for farmers to get rid of their farms.
