Uncovering the true cost of Labour’s Family Farm Tax

Ashbridge Partners recently ran an in-depth study of 2,000 British farmers to uncover the tangible effect that new reforms to IHT, APR and BPR will have on the UK’s farms and those living and working in the sector. The findings were alarming, revealing that up to 40% of farms could face closure within the next five years. The results garnered significant media attention, making headlines in national outlets such as This Is Money, Daily Mail, Daily Express, and a live GB News TV interview with our Managing Director, Mark Ashbridge. The leading agricultural publications also covered the news extensively including Farmers Weekly, Farmers Guide, and Farming UK.

What do these changes look like?

From April 2026, changes to APR mean 100% relief will be ending. APR has been in place since 1984 and has been the lifeblood of the sector allowing small family farms – encompassing assets such as land used for crops or rearing animals, farm buildings, cottages and houses – to be exempt from inheritance tax.

Instead, the new threshold will be set at the first £1 million of the combined agricultural and business property value. Above this amount, farmers will pay up to 20% IHT, which can be paid in instalments over 10 years, interest free. Farming couples can pass on up to £3 million free of inheritance tax, made up of the £1million tax free allowance for land and property for each person, as well as each spouses’ standard IHT allowance of £325,000 and an additional £175,000 relief from the residential nil-rate band on main residences.

What do these figures mean in reality?

According to a government impact assessment, it believes that these changes will only affect 500 estates each year, while The Country Land and Business Association (CLA) warns ‘capping agricultural property relief at £1 million could jeopardise up to 70,000 farms’. Figures from our survey suggest that the far-reaching impact could be much higher.

39% of the farmers we surveyed – which is the equivalent of nearly 82,000 farms – expect their business to be unsustainable within five years due to IHT bills, with 56% believing their farms will become financially unviable by 2035. 1 in 10 farms expect to face an IHT bill of over £1 million, with 31% expecting a bill of over £500,000. As a result, 41% of those surveyed believe they will have to sell off at least half their farm business to cover the costs.

External government figures indicate that the average Farm Business Income (FBI) was £86,000 across all farm types in Great Britain, according to 2022/23 data. 17% failed to make a positive FBI that year and only 41% made over £50,000. Based on our research findings, at the average income level, it would take inheritors 11 to 12 years to pay off an IHT bill of £1 million – more than the Government’s 10-year instalment option.

Only 40% of the farms we polled expect to fall below the proposed tax relief caps – leaving the equivalent of 125,400 UK farms* above the threshold – a stark contrast to the Government estimate of 500 and concerningly even higher than what the CLA anticipates.

Selling off land and assets

To cover the cost of their inheritance bill, over 4 in 10 of the farmers we spoke to stated they will be forced to sell off at least half their farm business, with 39% having to sell off farmland. This could create another worrying trend within farming communities.

When asked who they would likely have to sell their land to more than half (58%) believe they will end up selling to UK and International Corporations or ‘Tycoons’ – potentially threatening the future of UK farmland staying in the hands of traditional UK farmers. Previous industry reports indicate that, in the last 12 months, private and institutional investors, along with “lifestyle” farmers, account for more than half (53%) of agricultural land purchases in England. Just 47% of acquisitions were from traditional farmers.

According to our study it is not just land that is at risk either. 17% of respondents said they will have to sell agricultural buildings, 7% will need to sell vital machinery, and 4% are considering selling other properties, while 27% said they will need to liquidate shares and future investments. Nearly one in ten will have to go as far as to sell the farmhouse and 23% also reported that their farm shop could be at risk of sale, putting over 360 shops – 1581 currently in operation – at risk of closure or under new ownership.

Industry reaction

Our study was also supported by key industry stakeholders. As part of our research, we gathered insights from leading voices within the farming and agricultural sectors, including the CLA and Olly Harrison, influential farming voice and key organiser of March’s Pancake Day rally. Victoria Vyvyan, President of the Country Land and Business Association (CLA), said: “The Ashbridge Partners’ survey reinforces the CLA research that points to an inescapable truth – English and Welsh farms and small businesses, for the most part, do not have the profits to pay this tax. This significant survey, commissioned by Ashbridge Partners, shows that this government’s proposed changes to inheritance tax have failed to recognise that the Treasury will be taxing business assets and as they are sold – farm businesses will become unviable.”

In response to our findings, Olly Harrison said: “Any politician’s priority should be to keep its nation fed. I’m shocked by the lack of understanding by government of what UK farms do, three times a day, every day for everybody in the country. These are scary times and not just for farmers. The question is, will we see ration books again or even a ration app?”

The proposed changes could dramatically affect farming families and businesses, with many now unsure of how best to hand down their family business while staying within the parameters of the law and remaining financially viable.

With the results of our survey showing that over half of UK farms could be at risk of closure in the next 10 years, the government’s new policies simply aren’t affordable or sustainable for the majority of British farmers. If you are worried about these changes or need finance advice and support bespoke to your situation, don’t hesitate to get in touch with the Ashbridge Partners team to discuss your options.

You can contact us here or for more information on Ashbridge Partners, visit us here or follow us on LinkedIn @ashbridge_partners_ltd

About the study

Results based on a study of 2,000 UK farmers, surveyed between 12th February 2025 and 16th February 2025.

*Figures extrapolated from 209,000 total farm holdings in the UK.