Farm leaders have come together to warn the chancellor about the 'crippling effect' changes to inheritance tax (IHT) reliefs would have on farming businesses.
A letter by the four UK farming unions - the NFU, NFU Cymru, NFU Scotland and the Ulster Farmers Union - details how any changes would be a 'devastating blow' to family farms.
Speculation is mounting that inheritance tax reliefs, including agricultural property relief (APR) and business property relief (BPR), are to be reviewed, and either abolished or curtailed, in the forthcoming budget.
The unions say that APR and BPR allow working farm businesses to be passed to the next generation of farmers without incurring inheritance tax charges, which they would be unable to pay without selling those businesses.
APR in particular is seen as an essential relief for farmers who rent land as part of their business model, with 64% of farmland occupied by farmers who rent some or all of their land.
As a signatory of the letter sent to Chancellor Rachel Reeves, the NFU said it was 'incredibly concerned' about the speculation that IHT reliefs would be reviewed.
The union believes any changes would be in direct conflict with the pledge Defra Secretary of State Steve Reed made last year, that Labour 'have no intention of changing APR'.
The NFU, along with the other farming unions, have been making the case to the Treasury for several weeks about the impact of a decision to change APR and BPR could have.
“Let me be clear; changes to APR and BPR would be a devastating blow to British farming as we know it, the effects of which will be felt for generations to come," said NFU president Tom Bradshaw.
"It’s hard to see anything which would destroy the new government’s relationship with farmers more completely, or do more damage to family farm businesses, be they the owners of farms or the tenants who farm them for the landlord."
In the letter, the UK's four farming unions explain to the chancellor how IHT reliefs underpin working farming businesses 'of all shapes and sizes'.
Whether that’s large or small family farms, tenant farms or contracting businesses, almost every business producing food for the nation’s tables would be impacted.
The average return of working farm businesses is less than 1%, and most would be unable to meet inheritance tax charges if APR or BPR was stripped away, the letter warns.
Mr Bradshaw continued: “Changes to vital IHT reliefs for farm businesses don’t only threaten our food security, but also the shared ambition with government to protect and enhance our environment.
"Without the farm businesses there to manage the land and invest in environmental and biodiversity delivery, legislated targets could be in jeopardy.
“For the future of our family farms, food security and the environment we are calling on the chancellor to urgently consider the sizable effect changes to APR and BPR could have.
"Farmers have been let down year after year by empty words and policies that negatively impact their businesses, I am imploring the chancellor, don’t let that happen again on 30 October.”
Farming groups have warned the government numerous times to refrain from changing the reliefs, with the NFU recently writing to Prime Minister Sir Keir Starmer about the concern.
The Country Land and Business Association (CLA), which represents thousands of landowners, urged farmers to write to their MP stressing how scrapping the reliefs would be a 'catastrophic betrayal' to food producers.
