Record number of farms shut after inheritance tax grab
A record number of farms closed in the year after the government announced it was ending a carve out that allowed farmers to pass down their estates without paying inheritance tax.
According to official data, 6,365 agriculture, forestry and fishing businesses have shuttered over the past year, the highest number since the data started being collected in 2017.
The jump will pile further scrutiny on the government’s decision to end a decades-old inheritance tax relief – known as Agricultural Property Relief – that allowed farmland to be transferred down a generation tax-free.
The Chancellor claimed the relief was being abused as a loophole by super-rich landowners to avoid the unpopular levy when she announced the carve out would end in April 2026, in a move that had the support of several leading economic think tanks.
But it sparked a spate of protests across the country, with farmers warning it could spell the extinction of multi-generational farms in the UK and Labour’s political opponents branding it ‘the family farm tax’.
Tom Bradshaw, president of the National Farmers Union said the high level of closures “underscores the challenges and lack of confidence” plaguing the UK’s agricultural sector.
“Cashflow pressures, extreme weather and global volatility are making it harder for farmers and growers to produce the nation’s food and be profitable while doing it,” he said. “And with the family farm tax, many are now facing the possibility of being taxed out of passing their farm to the next generation.”
Inheritance tax change sparks net loss of 3,000 farms
The Office for National Statistics data, released on Friday, revealed the majority of closures in the past year took place during the first half of 2025, after Rachel Reeves announced her intention to end the inheritance tax relief.
Just 3,190 firms in the sector were opened over the same period, meaning a record net loss of over 3,000 businesses.
Olly Harrison, an arable farmer from the North West, said he could understand farmers were choosing to shutter their businesses in the face of spiralling operational and economic headwinds like the inheritance tax change.
He told Morning Wire: “Farming is difficult as it is, dealing with the many challenges the weather and nature throw at us. When the government throws you a bigger one than them all combined together, you might as well give up.”
Under the changes announced by the government last October, farms will retain a preferential inheritance tax rate. Agricultural assets will only be subject to a 20 per cent levy, and that rate will only apply on assets worth more than £1m; a higher threshold than the £325,000 most estates are able to transfer tax free.
Ministers also claim that other inheritance tax carve outs – like spousal relief – mean the threshold for farmers is in practice closer to £2m.
A spokesman for the Department for the Environment, Food and Rural Affairs, said: “Our commitment to farming and food security is steadfast and farming profits in the UK increased by £1.6 billion last year.
“We are slashing costs and red tape for food producers to export to the EU, have appointed former NFU president Baroness Minette Batters to recommend reforms to boost farmers’ profits, and we’re ensuring farmers get a bigger share of food contracts across our schools, hospitals, and prisons.”