The NFU has warned that many family farms will be 'seriously impacted' if the government changes agricultural property relief (APR) in the autumn budget.
Farmers are increasingly concerned by media reports that the Treasury is considering the move in the upcoming budget on 30 October.
The BBC has reported that revenue could be raised by revising inheritance tax rules. Without inheritance tax reliefs, the value of an individual’s business assets will be chargeable at a full 40%.
APR allows working farms to be passed from the principal farmer upon their death to the next farming generation, by making such businesses free from tax so long as they are working farming businesses.
But the NFU warned that significant changes to, or the abolition of, APR could have a disproportionate effect on small family farms, many of which 'are the backbone of British agriculture'.
Analysis by the union suggests that scrapping it would only save the Treasury £120 million a year, whilst the negative impact on farming would be 'much larger'.
NFU president Tom Bradshaw said that farmers were 'understandably worried and upset' by the possibility of changes to APR.
He said: "Major APR changes would put at risk many farming families’ succession plans and consequently undermine the government’s own ambitions for food and environmental security.
“I’m also very concerned that changes would damage the tenanted sector, as landowners will have much less incentive to let land to agricultural tenants.
"In short, this 'family farm tax', which is what removing APR amounts to, could be too much for some farming businesses which are already struggling with numerous challenges.”
A debate in parliament earlier this week looked at the issue, with Harriet Cross, Conservative MP, saying that APR played a 'crucial role in securing the longevity of farming and family businesses'.
“APR and BPR are not mere tax reliefs – they are the foundation of a thriving, sustainable and entrepreneurial United Kingdom,” Ms Cross added.
“They support our farmers and family businesses, pillars of our communities that have been there for generations.”
And Conservative MP for Central Suffolk and North Ipswich Patrick Spencer warned removing APR and BPR 'could push many [family farms] over the edge'.
“What a loss that would be to our economy, to our communities and to the many families who have owned, farmed and maintained their land for generations, and who will continue to do so for generations to come.”
Mr Bradshaw explained that farming was often a generational business, and APR made it possible for small family farms to pass from one generation to another.
"We’ve given the Treasury the details and evidence for our concerns and we stand ready to meet ministers and officials again, at any time, to reinforce the point that a family farm tax could push many over the edge.”
