Norfolk's farmers face farmageddon over new tax rules

Farmers in the county have warned smaller firms could face "serious consequences" over chancellor Rachel Reeves' plans to cut the relief.

It will mean people inheriting assets over £1m can expect to pay significantly more, which industry experts warn could push future generations to quit the farming business.

The ramifications could also push food prices up and destabilise the UK's supply chain, according to the National Farmer's Union.

It comes at a time when Norfolk's farmers, who have fed the region for countless generations, are already facing tough financial pressures causing strain on their mental health. 

Kit Papworth, director of contract farming business, LF Papworth (Image: LF Papworth) Kit Papworth, director of contract farming business LF Papworth Ltd, said: “The loss of agricultural property relief is potentially very serious for small family farms which are already struggling.

"It is a bitter blow to those farmers who are hoping to pass on their farm to the next generation. Farming is not sufficiently profitable to pay the tax or for a loan to do so.”

Chancellor Rachel Reeves outside Downing Street before delivering her Budget  (Image: PA) WHAT ARE THE CHANGES?

Ms Reeves has said she will "reform agricultural property relief" from April 2026.

Farming assets under £1m will not be affected but those over £1m will now face a 20pc inheritance tax bill.

Ms Reeves, speaking in the House of Commons, said: "This will ensure that we continue to protect small family farms, with three-quarters of claims unaffected by these changes."

There are fears the next generation of farmers could struggle due to the changes to inheritance tax. (Image: Newsquest)

'DISASTROUS FOR FARMERS'

Nick Deane, a NFU Norfolk representative who farms at Hoveton, said: "This budget is a huge blow for family farmers here in Norfolk and across East Anglia.

“The changes are expected to hit 66pc of farm businesses in England, including many in this region.

“If the government thinks this is a tax on the wealthiest people in society, it is very much mistaken.

Nick Deane, a National Farmer's Union Norfolk representative and Hoveton farmer (Image: NFU) “Just because a farm business has valuable assets, it does not mean that all farmers themselves are wealthy.

“The average farmer’s return on capital investment is less than 1pc.

“This is a tax on hard-working family farms and puts the future of many farm businesses under threat."

Tom Bradshaw, president of the National Farmers Union (Image: John Cottle/nfu)

Tom Bradshaw, president of the National Farmers Union, called the decision "disastrous" for family farms.

He said: "This is a disastrous budget for farmers.

"The shameless breaking of clear promises will snatch away the next generation’s ability to carry on producing British food.

"This budget not only threatens family farms but also makes producing food more expensive, which means more cost for farmers who simply cannot absorb it and it will have to be passed up the supply chain or risk the resilience of our food production."

Charles Whitaker, managing partner of property, business and rural consultancy at Norwich-based Brown&Co, said the Budget was a "smash and grab raid on employers, farmers, landowners and business".

“This Budget feels like wealth transfer in the making and is a serious threat to UK agriculture and food production," he said. 

“The chancellor’s cap on Agricultural Property Relief (APR) and Business Property Relief (BPR) is a huge threat to long term business ownership.

“Farmers, landowners and consumers who value UK-grown produce and our managed countryside should be deeply worried.

Charles Whitaker, managing partner of Brown&Co (Image: Angela Adams) “Family farming businesses generally operate on wafer-thin operating margins.

“When we apply the calculations from the new tax changes to a farming business they make worrying reading.

“Taking the example of a 400-acre UK farm which might have a value of £4m. From initial calculations, in April 2026 it faces an IHT tax charge of £600,000 on death.

“Under the pre-Budget rules it would have been exempt from this charge as a result of APR and BPR, allowing the business to remain intact to continue operating with land management and food production passed to the next generation. This was true also for other eligible businesses.

“This loss of relief seriously threatens the ability of operating businesses to survive generational transfer. 

“In another shock, the chancellor has announced a cap on the delinked BPS payment in England of £7,200 per farming business for the 2025 year.

"No guidance or statement has been provided for the 2026 and 2027 years.”