The government has been told to halt proposed changes to inheritance tax for farmers until the conclusion of the newly announced review into farm profitability.
In a letter addressed to the chancellor, NFU Scotland warns that continuing with planned reforms to agricultural property relief, which roll out from 2026, could severely undermine the review's impact.
Baroness Minette Batters, who was the president of the NFU for six years, was appointed to lead the comprehensive review into farm profitability earlier this month.
Appointed by Defra Secretary Steve Reed, Baroness Batters will provide the government with recommendations aimed at boosting farmers' profits.
But NFU Scotland's President Andrew Connon said: “You cannot hold a meaningful review into farm profitability while simultaneously implementing tax policies that reduce it.
“We are calling for a clear and time-limited pause on all changes to agricultural property relief and business property relief until the review has concluded and its recommendations have been properly considered.”
In the autumn budget last October, the government announced several reforms to agricultural property relief from inheritance tax.
This includes a £1m allowance which will apply to the combined value of property that qualifies for 100% APR.
After the £1m allowance has been exhausted, relief will apply at a lower rate of 50% to the combined value of qualifying agricultural and business property.
Mr Connon also raised concerns about the wider fiscal environment affecting farming operations, including increases to National Insurance contributions and changes to the classification of double cab pick-up vehicles.
He said the UK government must not pre-judge the outcome of the review, adding that the mental and financial strain on farming families was growing.
According to earlier NFU Scotland research, nearly half of Scottish farms are now pausing or cancelling planned investments due to these financial pressures.
Following this, the union is calling for the UK government to take three immediate actions in response to growing concerns within the farming sector.
First, it urges a pause on the proposed inheritance tax reforms, including any changes to agricultural property relief and business property relief.
Second, it is asking for a comprehensive review of the wider fiscal measures that have been introduced in recent budgets.
Finally, the organisation insists that no major policy changes should be implemented until the findings of the farm profitability review have been fully considered.
