RESPONDING to news the inheritance tax threshold will be raised to £2.5m, after a long-fought campaign by the Union, NFU Cymru President Aled Jones said: “ Over the past 14 months NFU Cymru, and its members, have been tireless in their efforts to amend the proposals, culminating in the ‘NO IHT’ mosaic display at the Winter Fair on the eve of this year’s budget.

“Today’s announcement, which sees the tax threshold raised from £1m to £2.5m, is a major development which will take many Welsh family farms above the threshold for Inheritance tax and will greatly reduce the tax burden for others. The change announced today, alongside the announcement by the Chancellor in last month’s budget to allow spousal transfer will mean that for many up to £5m in qualifying agricultural or business assets will be able to be passed on to the next generation before paying inheritance tax.

“When it became clear that we weren’t going to get rid of the proposals announced in the October 2024 budget NFU Cymru, alongside our colleagues in the NFU, NFU Scotland and Ulster Farmers Union, have left no stone unturned in lobbying for changes that would mitigate the worst elements of the original proposals.  Today’s announcement alongside the changes in the November budget will be very welcome news to many Welsh family farms, coming as it does just before Christmas, a time when families come together.”   

“I’d like to thank all our NFU Cymru members for their diligent and consistent lobbying of MPs, often having to share tragic and upsetting deeply personal stories with politicians and the media. I would like to thank the supply chain who stood by us throughout, recognising the damage that the original proposals would have caused not just to family farms but to rural Wales. The public have also been fantastic, with so many of them making up the 270,000 signatures I delivered to No 10 as part of the Stop the Family Farm Tax Petition earlier this year.

“We must also recognise the Welsh Labour MPs who were willing to meet with us and hear first-hand the human impact the original proposals would have had on farming families, who have stood up for their constituents and backed Welsh farming and rural Wales, and who in recent weeks demonstrated their support for our campaign by abstaining from the Budget Resolution 50.  We owe our gratitude to them for helping the UK Government make the changes needed.”

“Our thanks go to both the Westminster Welsh Affairs Committee and the EFRA Committee for their reports and recommendations on this matter and also the support of all the opposition parties.”  

“As a Union we have met with the Prime Minister, the DEFRA Secretary of State and the Welsh Office. I’d like to thank the UK Government for recognising that the original proposals would have caused untold damage to Welsh and British farming and for making the changes they have, which are very much welcomed and will make a significant difference to family farms the length and breadth of the Country.”

THE UK GOVERNMENT has increased the inheritance tax relief threshold for farmers from £1 million to £2.5 million, following months of pressure from the agricultural sector and widespread protests across the country.

The change marks a significant retreat from reforms first announced in Labour’s initial Budget last year, which had proposed limiting full inheritance tax relief on agricultural and business assets to the first £1 million.

Under the revised plans, due to take effect from April, individuals will be able to pass on up to £2.5 million in qualifying agricultural or business assets without paying inheritance tax. For married couples and civil partners, the combined allowance will rise to £5 million.

Assets above that level will attract 50% relief, meaning an effective inheritance tax rate of up to 20%, rather than the standard 40%.

According to the Department for Environment, Food and Rural Affairs (Defra), the revised threshold will reduce the number of estates affected by inheritance tax from around 2,000 under the original proposals to approximately 1,100, with the impact largely confined to the biggest farming operations.

The original plans sparked widespread anger within the farming community, including tractor protests outside Parliament, criticism from rural Labour MPs, and warnings from Baroness Minette Batters, the former NFU president, who said the proposals had caused severe distress among farming families.

Announcing the change, Environment Secretary Emma Reynolds said ministers had “listened closely” to concerns raised by farmers and rural businesses.

“Farmers are at the heart of our food security and environmental stewardship,” she said. “We are increasing the individual threshold from £1 million to £2.5 million, which means couples with estates of up to £5 million will now pay no inheritance tax.

“It is only right that larger estates contribute more, while we protect the family farms that underpin rural communities.”

The National Farmers’ Union welcomed the announcement. NFU president Tom Bradshaw said the move would be a “huge relief” for many farming families and acknowledged the pressure placed on elderly farmers by the original proposals.

In Wales, the change was also welcomed, though concerns remain about longer-term pressures on the sector.

The Welsh Deputy First Minister with responsibility for rural affairs, Huw Irranca-Davies, said the Welsh Government had repeatedly raised concerns with Westminster.

“Small and medium-sized family farms play a crucial role in Wales’ economy, culture and language,” he said. “We welcome this announcement and will continue discussions with farming unions and the UK Government on its impact here in Wales.”

Farmers’ Union of Wales president Ian Rickman described the move as a “welcome early Christmas present” after months of uncertainty.

“The initial proposals caused untold anxiety and damaged confidence across the rural economy,” he said. “While we remain frustrated by how these reforms were handled, the revised threshold provides much-needed relief at a difficult time for Welsh farming.”

Opposition parties, however, said the changes did not go far enough.

Conservative leader Kemi Badenoch described the move as a “huge U-turn” and said other family businesses remained exposed. Liberal Democrat MP David Chadwick called the concession “hard won” but warned that many farms would still struggle financially, adding that his party would continue pushing for the tax to be scrapped entirely.

Reform UK deputy leader Richard Tice said the climbdown did little to undo “a year of anxiety” for farmers, while Plaid Cymru’s Llyr Gruffydd MS said the episode highlighted “chaos” within the UK Government and accused ministers of causing unnecessary harm to family farms.

Welsh Conservative Shadow Farm Minister Samuel Kurtz said the policy shift came “too late”, adding that wider issues — including bovine TB, nitrate regulations and uncertainty over the Sustainable Farming Scheme — continued to place pressure on Welsh agriculture.

While the revised threshold has eased immediate concerns for many farming families, the debate over inheritance tax, farm succession and the long-term sustainability of British and Welsh agriculture is far from over.

THE FUW has welcomed a UK Government announcement to raise the proposed inheritance tax threshold on agricultural assets, describing the move as an “early Christmas present” for farming families across Wales.

The Government confirmed on Tuesday (Dec 23) that the cap on 100% Agricultural Property Relief (APR) and Business Property Relief (BPR) will increase from £1 million to £2.5 million per person. Assets above that level will qualify for 50% relief.

When combined with measures announced in last month’s UK Budget allowing unused reliefs to be transferred between spouses, the changes will create an effective inheritance tax allowance of up to £5 million for married farming couples.

The revised thresholds are expected to come into force on April 6, 2026.

Responding to the announcement, FUW President Ian Rickman said the decision would ease months of uncertainty that had weighed heavily on the sector.

“Today’s news will be a welcome early Christmas present for many farmers across Wales who have endured months of uncertainty and anxiety caused by the UK Government’s ill-thought-out changes to inheritance tax,” he said.

“The Government’s initial proposals caused untold worry for farming families and seriously dented confidence across the sector and the wider rural economy, as farmers feared for the long-term succession of their businesses.”

The FUW said it had spent the past year lobbying for a fairer and more proportionate approach to inheritance tax reform, warning that earlier proposals risked undermining family-run farms and rural communities.

Mr Rickman added: “Our calls for change have been echoed by opposition parties, cross-party parliamentary committees, and an increasing number of the Government’s own MPs.

“At a time of considerable uncertainty and volatility for farmers across Wales, these revisions to the tax threshold offer some much-needed relief.”

However, he said the union remained frustrated by how the reforms were originally handled.

“While we remain disappointed with the Government’s approach, I would like to thank Ministers in the Wales Office for their willingness to engage in dialogue with us on this issue,” he added.

The FUW said it would continue to press for long-term tax policies that support farm succession, food security, and the sustainability of rural Wales.