Farmers are being urged to write to their MP stressing how scrapping inheritance tax reliefs would be a 'catastrophic betrayal' to the nation's food producers.
Speculation has been mounting that the government is looking to scrap or cap agricultural property relief (APR) and business property relief (BPR).
This is despite Labour’s assurances over the past year that it would not tamper with the reliefs.
APR exists to ensure the continuance of farming after the death of the farmer, while BPR fulfils the same objective for other types of family businesses.
Farming bodies say the reliefs allow farmers and rural business owners to continue to produce food, maintain landscapes and support the rural economy.
If there was no relief, or even if it was capped as some have suggested, the industry has warned there would be a high tax bill to pay.
The Country Land and Business Association (CLA), which represents thousands of farmers, said that many would be 'in the firing line' if they were scrapped or changed in the upcoming budget.
For an average family farm of 215 acres, without such reliefs, 40% of the farm’s land would need to be sold to fund inheritance tax liabilities, according to the body's own research.
A recent poll of more than 500 farmers found that 86% said it was ‘likely’ that some or all of their land would have to be sold upon their death, if reliefs are removed.
And the vast majority (90%) said the move would damage UK food production and food security.
CLA president Victoria Vyvyan has urged farmers to write to their MP asking them to help protect food security and support the rural economy by maintaining the reliefs.
She said: “If the government rips the rug from under hard-working farmers by removing these reliefs, it would be a catastrophic betrayal.
“Someone inheriting a family farm from their parents might be forced to sell up to 40% of it to pay the inheritance tax bill.
"If 5% of farms have to sell at their next point of inheritance, 27,000 holdings face going out of business.
“In many cases it would be the end of the family farm and a hollowing out of rural communities, stifling rural entrepreneurialism."
Government statistics show 17% of UK farms failed to make a profit and 59% made a profit of less than £50,000 in 2022/23.
The CLA said this would leave little scope to pay inheritance tax out of farm income.
The NFU recently warned that many family farms would be 'seriously impacted' if the government changed the reliefs in the autumn budget, on 30 October.
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'.
