THE threshold for inheritance tax levied on farms should be raised, in order 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 in 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, due to come into force in April 2026, will mean that inheritance tax of 20 per cent is applied on farms worth more than £1 million. Previously, agricultural assets have been exempt from inheritance tax.
Bishop Usher said that the proposals were, for many farmers, the “final straw after years of challenges.” He urged the Government to raise the threshold at which inheritance tax is levied, so that it applied only to the largest farming estates.
He also argued for a “tweak” to the rules around tax-free gifts in the seven years before a person’s death, “so that farm owners who die in the next seven years have an opportunity to make tax-avoiding gifts in light of the Budget changes”.
This, he said, would be an “eminently sensible and compassionate” way forward. The breakup or sale of smaller farms to pay tax bills was likely to affect biodiversity, he said.
The Bishop of Newcastle, Dr Helen-Ann Hartley — whose diocese, like Bishop Usher’s, consists in large part of farming communities — also spoke against the Government’s proposals.
“I urge the Government to truly consider the impact of these 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 wrong to tax farmers as if agricultural property was personal wealth, “instead of what it really is — a business asset”.
Baroness Mallalieu, who is a Labour peer as well as president of the Countryside Alliance and a small livestock farmer, also criticised the policy. “I believe the Government know that they have got this one wrong,” she said. She called for a change of plan.
The only other Labour peer to speak in the debate was the Financial Secretary to the Treasury, Lord Livermore. He was also the only contributor to speak in defence of the proposals, suggesting that they were necessary in order to achieve economic stability.
The inheritance tax, he said, was to be levied at half the usual rate on assets worth more than £1 million, and about three-quarters of estates were not expected to face any increase in their tax burden under the new rules.
