Northumberland farmers welcome inheritance tax U-turn but ‘more to do’

Under the changes put forward as part of 2024’s budget, inherited agricultural assets worth more than £1m would have to pay inheritance tax at 20%.

The Government announced a significant watering down of the controversial policy last month after more than a year of campaigning by farmers, saying the threshold will rise from £1 million to £2.5 million per person.

These assets were previously exempt, allowing farms to stay in families without costly tax bills when they were passed down. The previous threshold prompted concerns that many family farms would have to be carved up to pay for costly tax bills, but the new rules mean couples will be able to pass down up to £5 million in assets without facing a tax bill.

According to figures from Strutt and Parker reported by Farmers Weekly, the average land value in 2025 came out at £10,600 per acre for arable land was £10,600 and £8,000 per acre for pasture land. Northumberland has some of the largest farms in the country – the average farm in the North East is 138 hectares according to Government figures.

This is the largest average farm size of all English regions. Northumberland National Park say that the average farm size in the Cheviots is 1,205 hectares, although upland farmland is usually cheaper than lowland.

Northumberland county councillor Guy Renner-Thompson welcomed the changes, but warned there was more to do. The Conservative cabinet member said: “Today, after more than a year of campaigning, Labour have finally been forced to change course on their disastrous family farm and family business tax which hurt so many people here in North Northumberland.

“This has only happened because farmers, businesses and people on the street stood up and refused to be ignored. A huge amount of work has gone in across the county to convince the Government it was damaging farmers who as a result pulled planned investment.

“Associated trades, from shed builders to machinery dealers to concrete suppliers, have all seen their sales reduce putting more jobs at risk. Today’s announcement that the IHT threshold will be raised from £1m to £2.5mil is welcome.

“There is still more to do, but we’ll worry about that in the New Year.”

Hexham’s Labour MP Joe Morris said he expected more amendments to come to Parliament in the New Year but insisted he would advocate for the constituency’s farming community.

Mr Morris said: “I am very pleased that the Government has announced an uplift to the Inheritance Tax (IHT) thresholds. As I have always said, policy affecting farming should involve farmers directly.

“I stand by this and I will continue to advocate for the farming community in the Hexham constituency and right across the North East. I want to thank every constituent that has contacted me about this, who attended my recent advice surgery for the farming community, and who I have met during farm visits.

“It is thanks to the information that you have shared with me and your hard work that I have been able to advocate on your behalf and achieve this threshold uplift today.”

Nationally, the farming union the NFU has said the changes marked a “huge relief”.

President Tom Bradshaw said: ““We have spent the past 14 months campaigning and lobbying to try and mitigate the worst of the impacts of the proposals. After it became clear that this policy wasn’t going anywhere, we have focused our campaign to mitigate the worst of its impacts for the majority.

“Today’s announcement, which sees the tax threshold raised from £1m to £2.5m, will come as a huge relief to many. While there is still tax to pay, this will greatly reduce that tax burden for many family farms, those working people of the countryside.

“I am thankful common sense has prevailed and government has listened. I have had two very constructive meetings with Prime Minister Sir Keir Starmer and dozens of conversations with Defra Secretary of State Emma Reynolds. She has played a key role underlining the human impact of this tax.

“These conversations have led to today’s changes which were so desperately needed. From the start the government said it was trying to protect the family farm and the change announced today brings this much closer to reality for many.

“I’d like to thank the Prime Minister for recognising the policy needed amending and the Chancellor for bringing in the spousal transfer in the Budget. Combined, this is a significant change.”

DEFRA Secretary Emma Reynolds added: “Farmers are at the heart of our food security and environmental stewardship, and I am determined to work with them to secure a profitable future for British farming. We have listened closely to farmers across the country and we are making changes today to protect more ordinary family farms.”