THE threshold for inheritance tax levied on farms ought to be raised, so as to alleviate the pressure that the Government’s proposals are putting on farmers, the Bishop of Norwich, the Rt Revd Graham Usher, has said.
In a debate within the House of Lords last week, Bishop Usher said that the Government’s proposals were bringing “huge stress and deep concern to the farming community”.
New rules, as a result of come into force in April 2026, will mean that inheritance tax of 20 per cent is applied on farms price greater than £1 million. Previously, agricultural assets have been exempt from inheritance tax.
Bishop Usher said that the proposals were, for a lot of farmers, the “final straw after years of challenges.” He urged the Government to boost the brink at which inheritance tax is levied, in order that it applied only to the biggest farming estates.
He also argued for a “tweak” to the foundations around tax-free gifts within the seven years before an individual’s death, “in order that farm owners who die in the subsequent seven years have a chance to make tax-avoiding gifts in light of the Budget changes”.
This, he said, can be an “eminently sensible and compassionate” way forward. The breakup or sale of smaller farms to pay tax bills was more likely to affect biodiversity, he said.
The Bishop of Newcastle, Dr Helen-Ann Hartley — whose diocese, like Bishop Usher’s, consists largely of farming communities — also spoke against the Government’s proposals.
“I urge the Government to really consider the impact of those reforms and encourage them to have continued dialogue and an assessment of the impact on farming families and rural communities — the people to whom we owe the food on our tables,” she said.
The debate was called by the Earl of Leicester, a hereditary peer who sits as a Conservative. He said that it was improper to tax farmers as if agricultural property was personal wealth, “as a substitute of what it truly is — a business asset”.
Baroness Mallalieu, who’s a Labour peer in addition to president of the Countryside Alliance and a small livestock farmer, also criticised the policy. “I feel the Government know that they have this one improper,” she said. She called for a change of plan.
The only other Labour peer to talk in the talk was the Financial Secretary to the Treasury, Lord Livermore. He was also the one contributor to talk in defence of the proposals, suggesting that they were obligatory so as to achieve economic stability.
The inheritance tax, he said, was to be levied at half the standard rate on assets price greater than £1 million, and about three-quarters of estates weren’t expected to face any increase of their tax burden under the brand new rules.
