PLAID CYMRU urged the UK Government to pause and review planned changes to inheritance tax for farmers, warning the impact could be destructive in rural Wales.

Llŷr Gruffydd said the problem with the policy is it does not distinguish between millionaires buying land to avoid tax and family farms scraping a living from the land.

Raising concerns about far-reaching consequences, he told the Senedd: “Wales isn’t a nation of lavish-living millionaire farmers. Our family farms operate on tight margins and they’re cash poor; many live a hand-to-mouth existence and too many are in debt.”

Mr Gruffydd warned the changes, which will see 100% agricultural property relief to inheritance tax restricted to the first £1m from April, will force family farms to sell land.

The shadow rural affairs secretary said: “The policy is utterly counter-productive at a time, of course, when we need to be strengthening our food security – not undermining it.”

Recognising a need to crack down with multi-millionaires who buy up land for tax avoidance purposes, Mr Gruffydd warned working family farms are being caught in the cross-fire.

“This isn’t just bad news for farms,” he said. “It’s bad news for the wider food sector, for the wider rural economy and for jobs in the supply chain. It will reduce local economic activity … and, of course, it’ll further weaken the social fabric of our rural areas.”

Leading a debate on March 5, he pointed to proposals for an alternative “clawback” system which would levy inheritance tax if assets are sold by the beneficiary within seven years.

He explained clawback is used by other European countries to discourage buying farmland to minimise tax bills, adding that such a policy could raise 7% more for the UK Treasury.

“It feels very often like a sector under siege these days,” Mr Gruffydd said. “But this proposal on inheritance tax goes deeper … the one thing you cling onto is your ability to pass your farm on to the next generation, to give your children a livelihood.”

Peter Fox, the Conservatives’ shadow rural affairs secretary who is a retired farmer, backed calls to pause the “draconian” decision to remove agricultural property relief.

He said: “Let’s also be clear: average farm incomes are low, certainly nowhere near even half of what any of us get paid in this place.

“There’s no way the average farm can generate enough money to pay inheritance tax, even if spread over 10 years. The fact is farms would have to be broken up.”

His colleague Samuel Kurtz criticised the Welsh Government’s “delete-all” amendment to the motion which “rides roughshod over this Senedd in trying to gain a unified voice”.

Mr Kurtz, the son of a farmer, pointed out that Steve Reed, the UK rural affairs secretary, told farmers Labour had no plans to change inheritance tax rules before the election.

Welsh Lib Dem leader Jane Dodds said farmers and their families are frozen in fear as she accused the Labour UK Government of repeatedly picking on the little people.

“Families are genuinely worried about their futures,” she said. “Young people are concerned about whether they can carry on. This policy discriminates against the widowed, the widower, the terminally ill and older farmers.”

Pointing out that 43% of the sector speaks Welsh, Plaid Cymru’s Siân Gwenllian warned the change could have a disproportionate impact on the language.

Party leader Rhun ap Iorwerth, whose son is an agriculture student, warned the change will be a heavy blow to an industry already under so much pressure.

He said: “Welsh family farms need a Welsh Government that stands up for them and genuinely makes the case that this inheritance tax change should be delayed until its impact is honestly and carefully assessed.”

Huw Irranca-Davies, the deputy first minister, said the UK Government inherited a catastrophic financial situation, with a £20bn “blackhole”.

Mr Irranca-Davies, who is responsible for rural affairs in Wales, acknowledged significant concerns about the proposed changes to agricultural property relief which is not devolved.

He said: “Many farmers have met with me and shared their worries about passing on their farms to their children, reflecting a widespread anxiety amongst our rural areas.

“I have made and will continue to make strong representations to the UK Government about the need to understand and respond to the specific concerns of our Welsh farmers.”

Plaid Cymru’s motion was narrowly voted down, 26-25, before the Welsh Government’s amended version was agreed, 26-14 with 11 abstentions.

FARMING families affected by proposed inheritance tax changes will gather at the Senedd tomorrow (Wednesday, March 5) to urge Members of the Senedd (MSs) to support a Plaid Cymru motion calling for the policy to be reconsidered.

The debate and subsequent vote are seen as a final effort to persuade the Welsh Government to send a clear message to their Labour colleagues in Westminster. The timing is crucial, coming just weeks before the UK Spring Budget, which presents an opportunity for Chancellor Rachel Reeves to announce a policy shift.

NFU Cymru will coordinate meetings between farming families and their elected representatives on the day of the debate, encouraging cross-party support for the motion.

‘Devastating consequences for Welsh farmers’

Plaid Cymru’s Shadow Minister for Rural Affairs, Llyr Gruffydd MS, who will lead the Senedd debate, said: “This UK Government decision will have devastating consequences for farming families across Wales.

“Wales is not a nation of millionaire farmers. Our family farms operate on tight margins and are often cash-poor, with many already burdened by debt. These changes will force families to sell land, threatening their livelihoods and making farms less viable for future generations.

“The policy is unforgivable and utterly counterproductive at a time when we should be strengthening our food security, not undermining it.

“That’s why Plaid Cymru is calling on the Welsh Government to make the strongest possible case to their Labour colleagues in London to reverse course.”

‘A threat to rural communities’

NFU Cymru President Aled Jones echoed these concerns, warning of the broader impact on the agricultural sector:

“If the UK Government’s planned inheritance tax changes go ahead, they will have an incredibly detrimental impact on Wales’s family farms and the many businesses that rely on them.

“By imposing unsustainable tax liabilities on the backbone of our food system, the UK Government risks dismantling a vital sector and hollowing out our rural communities.

“I therefore very much welcome Plaid Cymru’s efforts in securing this debate. It is vital that the impacts of these proposals on Wales are heard and properly considered in the Senedd.”

The debate is expected to be closely watched by the farming community, with campaigners hoping to influence policymakers before the Spring Budget announcement.

FOLLOWING months of engagement with representatives from the farming sector, Henry Tufnell MP has called for the Chancellor’s proposed changes to IHT to be reviewed, and for the relationship between government and the farming community to be restored. 

Appearing at local Hayscastle farm on Friday morning, Tufnell said: “We need the opportunity to look again at the threshold that has been proposed, and the possibility of introducing a transition period. I believe that a transition period will protect those elderly farmers who believed in good faith that they could continue to farm for as long as they wanted to.” 

He continued, “I was disappointed to hear that the recent meeting between representatives from the farming sector and government didn’t go well.  The relationship between our farmers and our government is crucial – and today, it is broken. We cannot achieve the growth our country so desperately needs without the trust, the support, or the confidence of our farmers. We cannot deliver our ambitious net-zero targets without that solid working relationship. We need to listen to our rural communities; I know that the reforms to IHT are the biggest anxiety for farmers right now; and so, we should listen to them. 

After over a decade of Tory decline, and neglect from successive conservative government’s I know that Labour can deliver for the people of Pembrokeshire and for the people of Great Britain, and we must do that with a strong working relationship with our farmers.” 

Aled Davies, from NFU Cymru said, “Henry has done the right thing by listening to his farming constituents and their representatives. He has always agreed to meet whenever we ask for a meeting – It is most unfortunate that every meeting we have had with him since the budget is to discuss the inheritance tax issue when we could have been discussing other opportunities for the industry to succeed rather than this policy which will almost certainly see the demise of many family farms.  As NFU Cymru always does, we backed what we said by giving him facts and figures in our argument against this policy. I am hopeful that MPs like Henry will be able to get the government to relook at this policy that has already created huge uncertainty and reduced investment in agriculture. Pembrokeshire really does rely on Agriculture for growth in the economy, so it is imperative that the government consults over this policy before any decision is made.” 

Lottie Wilson, from Wilson Family Farm where Henry made the announcement from said, “We warmly welcomed Henry to the farm last week and were both impressed and greatly relieved to hear his stance on the IHT agricultural relief. Knowing that he’s met with Pembrokeshire NFU several times, as well as with several farmers both in London, and here in Pembrokeshire; it’s encouraging to know that he has taken our concerns on board, and we are extremely grateful that he has been willing to stand up against this purposeful damaging change to IHT, and we can only hope that other MPs are able to see sense and are brave enough to do the same.”