Chancellor Rachel Reeves has been urged to 'think again' as inheritance tax changes will be 'immensely damaging' to the let sector of agriculture.
The Tenant Farmers Association (TFA) believes that the budget leaves the let sector of agriculture with serious concerns about its future.
As expected, the chancellor did decide to increase taxes on agricultural land, leaving many private estates with significant numbers of tenants in a 'real quandary'.
Whilst she has announced changes which will apply equally to agricultural property relief (APR) and business property relief (BPR), she reduced the limit of 100% relief from inheritance tax to £1m.
TFA chief executive, George Dunn said these changes to BPR and APR would leave tenant farmers with 'huge concerns'.
The £1m tax-free exemption may help small-owner occupiers, but it will not help small tenant farmers on large estates, particularly those occupying under insecure Farm Business Tenancies, he noted.
"The reduction to £1m of the limit on the value of estates that will be tax free on death will inevitably hit large, let estates more heavily than small owner occupiers since they will be more likely to breach the £1m limit," Mr Dunn said.
"Having to pay a 20 percent tax bill on half the value of estates over £1 million of value following every death, will be a major blow to privately owned let estates."
The tax changes to be introduced from April 2026 could lead to a significant amount of land disposals from private estates, the TFA warned.
This was also witnessed when death duty rates caused the breakup of rural estates in the middle 20th century.
Mr Dunn added: "It is hugely frustrating that the chancellor did not choose to accept the TFA’s proposal to allow 100% inheritance tax relief to all land let for periods of 10+ years.
"That would have driven more sustainable farm tenancies, created a secure rural economy and protected traditional let estates, whilst hitting those landlords who continued to take a short-term approach to the management of their land."
He urged the chancellor to 'think again': "We will be writing to argue that the 2026 legislation must include a provision to exempt land let for 10+ years.
"Without this provision, we could see the loss of many, small family farms,” concluded Mr Dunn.
