Rachel Reeves’s proposed modifications to agricultural aid on inheritance tax—dubbed the “tractor tax”—might influence 5 instances extra farmers than the federal government has estimated, in response to the Central Affiliation of Agricultural Valuers (CAAV).
The Treasury has acknowledged that the modifications will have an effect on roughly 500 farmers every year. Nonetheless, Jeremy Moody, secretary and adviser to the CAAV, argues that this determine is wrong attributable to a misunderstanding of the farming trade’s complexities. He asserts that the brand new measures will really influence round 2,500 farmers yearly.
Moody contends that the Treasury’s evaluation overlooks farmers who solely declare Enterprise Property Aid (BPR) and never Agricultural Property Aid (APR). This consists of people who personal land however not the farmhouse, these in farming partnerships, tenant farmers with out possession of land or buildings, and farmers who’re shareholders in household firms.
“They’re wrong because they’re working on an incomplete picture,” Moody stated. “What they got wrong is, they didn’t know what to ask and HMRC couldn’t answer them even if they had.”
He estimates that over a era, about 75,000 farms can be affected by the modifications.
At the moment, farmers can declare as much as 100% aid on inheritance tax for his or her land and buildings via APR and for operational gear and livestock through BPR. Ranging from April 2026, solely the primary £1 million of their mixed land and enterprise property will qualify for 100% aid beneath the brand new guidelines. Any quantity above this threshold can be topic to inheritance tax at an efficient fee of 20%—half the usual fee of 40%.
The federal government argues that farmers can successfully have a nil-rate tax band of £1.5 million every, permitting a married couple to move on as much as £3 million in property tax-free. This calculation consists of private inheritance tax allowances. Nonetheless, Moody disputes this, stating that these thresholds are private and shouldn’t be utilized to enterprise property.
“That seems to me to be basically wrong,” he commented. “If you’re throwing all that against the farm then actually what you’re doing is saying all of your personal effects will be taxed at 40%.”
The BBC Confirm fact-checking service has supported the Treasury’s estimates, and the federal government has publicized this evaluation. Sir Keir Starmer remarked, “All of you can check out what that means in terms of the impact. I think the BBC has already done it.”
A authorities spokesperson acknowledged: “Our commitment to our farmers is steadfast—we have committed £5 billion to the farming budget over two years, including more money than ever for sustainable food production… We have been clear since this change was announced that around 500 claims of Agricultural and Business Property Relief each year will be impacted… It is not possible to accurately infer inheritance tax liability from farm net worth figures as there are different circumstances affecting each farm.”
Moody criticises the federal government’s and BBC’s analyses for not totally understanding the farming trade, resulting in underestimations of the coverage’s influence. He emphasises that many farmers, equivalent to tenant farmers, might not profit from sure tax allowances and that the modifications might considerably have an effect on their monetary standing.
