Supermarkets back UK farmers in fight against inheritance tax changes

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Supermarket giants Tesco and Lidl have come out to fight for UK farmers, asking Prime Minister Sir Keir Starmer to pause his inheritance tax reforms, or risk the future of the sector.

British farmers have taken to the streets in London in recent months to protest against changes to inheritance tax relief announced in October’s budget, which will end decades of exemption from death benefits .

The reforms mean that landowners from April 2026 will be subject to a 20 per cent tax on farmland above a threshold of between £1.3m and £3m, depending on whether they are married and s he owns a house.

Ashwin Prasad, Tesco’s chief commercial officer, said on Wednesday that the UK’s biggest supermarket “fully understands” the concerns raised by “many smaller farms” that depend on farm property relief and farm relief. commercial property.

“We will support calls by the National Farmers’ Union for a pause in the implementation of the policy while a full consultation is carried out,” he added. “This is not just a debate about individual policies – the UK’s future food security is at stake.”

Lidl said it was “concerned that recent changes to the IHT regime will impact on the confidence of farmers and growers and hold back the investment needed to build a resilient, productive and sustainable British food system”.

Meanwhile, Co-op Dairy Group, a group of milk suppliers, told members in a letter that it had “directly contacted the relevant government departments to communicate our hope that they will look again at the impact of the . . changes” and he supported calls to pause the implementation of the policy.

Supermarkets themselves have drawn fire from farmers, with tractors this month parked at a number of large retailers across the country to raise awareness of the impact of the tax changes. On January 16, the Morrisons supermarket was granted a High Court injunction to block further protests.

Ahead of the October budget, farming campaign groups have slammed supermarkets for squeezing their margins with low food prices and failing to support homegrown produce.

Earlier Wednesday, the Office for Budget Responsibility released a brief cost of the IHT policy, we estimate that there would be an extra £500 million for the Treasury annually between 2027 and 2029, in line with the government’s estimates.

But the tax watchdog noted that receipts were likely to decline after seven years as farmers increasingly gave away their properties to children and modified their tax planning strategies.

The OBR also suggested it would be “more difficult for some older people to quickly restructure their affairs” in terms of estate planning to adjust to the new measures.

Victoria Atkins, Tory shadow environment secretary, said the government had “chosen to destroy British family farming for little return. The OBR is clear that it will be almost impossible for older farmers to restructure quickly their business in response to this vindictive tax.”

Farmers said the sector was struggling with climate change pressures, real-time cuts to subsidies, high inflation, razor-thin margins and the prospect of increased competition as the UK deals post-Brexit business before chancellor Rachel Reeves announces IHT changes. .

The exemption was introduced in the 1980s to allow farms to remain in the same family after the death of an owner, a trend that many warned would become much tougher. However, it helped to push up the price of fields as wealthy individuals bought agricultural land as a form of legal tax avoidance.

Farmers trying to pass on their estates, and their spouses, are each eligible for £1m of relief before they start paying IHT on their land, on top of the usual inheritance allowance.

Given that couples already enjoy a threshold of £1 million on their estates that means two spouses will enjoy a threshold closer to £3 million, officials noted.

A government spokesman said: “Our reform to agricultural and commercial property relief will mean that estates will pay a reduced effective rate of inheritance tax of 20%, instead of the standard 40%, and payments they can be spread over 10 years, without interest.

“This is a fair and balanced approach, which repairs the public services we all rely on, which will affect around 500 estates next year.”