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Money Blog: Interest rate cut to 4.75% – Bank of England expected to reveal more about direction | News about money
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Money Blog: Interest rate cut to 4.75% – Bank of England expected to reveal more about direction | News about money

Farmers passing on land used for agricultural purposes have not previously incurred any inheritance tax.

But from April 2026, the chancellor announced in the Budget last week, anything over £1m will be taxed at an effective rate of 20% (the 40% inheritance tax threshold, but with 50% tax relief) .

The National Farmers’ Union warned that this could force farmers to borrow money or sell plots of land to pay inheritance tax.

To explain why farmers are so angry, we spoke to Pat Thornton, a third-generation arable farmer from North Lincolnshire, for whom the £1m threshold is not enough.

He told Money that the budget announcement made for a “very dark day” for the industry.

“Our wealth is in our land,” he said, explaining that historically farmers are “stock-rich and cash-poor” – his machines alone cost more than a million pounds.

Pat estimates the 350-acre farm he runs with his elderly father is valued at between £3m and £4m, which could leave him with an inheritance tax of £400,000.

But despite having this wealth of assets, extreme weather over the past two years means it hasn’t made any money.

“And on a farm, unfortunately, deaths can occur in quite tragic circumstances – and out of the blue – so you don’t have a war chest to pay the bills that come in.”

But selling the land to pay those bills could make farms so small they’re simply unviable, Pat said.

Robert Morse, Partner at Private Officean independent financial planning firm, told Money: “There is this assumption that because there is this value of the asset, you can tax the asset.

“But actually as a business it makes very little profit. And most smart farmers reinvest those profits back into the farm – they don’t just have that kind of money in the bank.”

The government insists the changes will only affect a small number of farms, but the Country Land and Business Association believes up to 70,000 could be affected. There are around 209,000 farms in the UK, official figures suggest.

Three farm workers kill themselves every week

Three people working in farming and agriculture take their own lives every week, figures from the British Counseling and Psychotherapy Association showed last year. The suicide rate for male farm workers is three times higher than the national average.

And Pat fears this will only get worse.

“One suicide a week is one too many,” he said. “This is just another thing about our stress levels that we could really do without.”

Speaking from his tractor, as he prepared to sow crops he was unable to plant already this year because of the weather, he said he found himself wondering if it was worth continuing farming.

“Why do I keep doing it? It’s getting harder and harder to remember why.

“The support is gone – not just the financial support, but this week it’s like the moral support is gone too.”

With the UK relying on imports for around 40% of its food, Pat said he could not understand why the new government did not want to prioritize agriculture.

What farmers can do to mitigate a huge tax

Since farming is traditionally a family business, having a succession conversation is even more difficult to navigate—but doing so sooner rather than later can prevent additional costs.

Robert told us that farmers “don’t have to pay a big tax” and “you can certainly structure it so that no tax is paid”.

Under inheritance tax rules, houses, land and buildings can be gifted (eg a farm can be given to an heir) provided you then live for another seven years.

“But if you make that gift and you don’t survive seven years, that could be a problem,” he said, explaining why it’s important to have those conversations sooner rather than later.

He cited a quote from former Labor chancellor Roy Jenkins, who described inheritance tax as “a voluntary tax paid by those who distrust their heirs more than they dislike the Inland Revenue”.

“You have to have a sensible conversation about who’s going to take over,” he said.

Pat said these conversations with his father were “incredibly difficult”.

“I would start talking and he would go. But it was a matter of stopping him – and over time he could see that we had common goals.”

Robert said the older generation can no longer leave succession planning to chance: “You can either have some say in what happens, or you can leave it up to chance.”

Random fate and a huge toll.