The UK farming industry is facing big changes due to new government policies. Key updates include changes to inheritance tax (IHT) and farming subsidies. These changes are creating challenges for farmers and stirring up debates across the country.
Here is a simple breakdown of what is happening and why it matters.
1. Changes to Inheritance Tax
The government is changing the rules for inheritance tax on farms. From April 2026, farms worth over £1 million will face a 20% tax when passed down to the next generation. Before, farmers had exemptions under Agricultural Property Relief (APR) and Business Property Relief (BPR), which allowed many farms to avoid this tax.
This new tax could force farming families to sell parts of their land or assets to pay the tax bill. Many farmers are worried this will break up long-standing family farms and hurt rural communities. Farmers argue that their businesses are more than just economic entities—they play a key role in maintaining the countryside and producing food.
Farmers across the UK have protested against this policy. Tractor convoys have rolled through London and other cities with signs like “Save Our Farms.” The National Farmers’ Union (NFU) and other groups are asking the government to rethink this tax, saying it will hurt family farms.
2. Changes to Farming Subsidies
The government is also changing how farming subsidies work. The old EU system of direct payments called the Common Agricultural Policy (CAP), is being replaced by the Environmental Land Management (ELM) scheme. This new system focuses on rewarding sustainable farming practices instead of the amount of land owned.
The ELM scheme encourages farmers to adopt practices like improving soil health, protecting wildlife, and planting trees. These goals are positive, but farmers are worried about losing financial stability. Many relied on CAP payments, and the shift to the new system has left funding gaps.
The NFU has warned that subsidy cuts, along with inheritance tax changes, could push many farmers into financial trouble. Farmers are also dealing with unpredictable weather and growing competition, making it even harder to stay afloat.
How These Changes Affect the Industry
The combination of tax changes and subsidy cuts is having a big impact on farming. Some key concerns include:
- Smaller family farms might have to sell or merge with larger businesses.
- If farms close, the UK’s ability to produce its own food could decline, raising food security issues.
- Farms support rural communities, and their loss could hurt local economies, schools, and services.
Farmers Call for Change
Farmers are urgently asking the government to address the issues these policies are creating. One major demand is to raise the inheritance tax threshold or provide exemptions specifically for family-run farms. They argue that farming businesses often have high asset values due to land ownership but operate on slim profit margins. Without relief, many families may lose their farms to tax burdens that they cannot afford to pay.
In addition to tax relief, farmers are seeking more robust financial support during the transition from the EU subsidy system to the Environmental Land Management (ELM) scheme. The current funding gaps leave farmers in a precarious position, particularly small-scale operations that depend heavily on direct payments to maintain financial stability. Farmers are asking for clear and consistent financial programs that provide them with the resources they need to adopt sustainable farming practices without compromising their livelihoods.
Another crucial request is the creation of long-term policies that strike a better balance between environmental goals and the realities of running a farm. While farmers support the need for sustainability, they feel current policies place disproportionate pressure on them without providing adequate guidance or infrastructure. Many are calling for a collaborative approach where farmers, policymakers, and agricultural experts work together to develop strategies that protect the environment and ensure the survival of the farming sector.
The NFU and other organisations are actively lobbying for these changes, emphasising that the future of UK farming depends on policies that value both sustainability and economic viability. Farmers have highlighted that without meaningful action, the combined pressures of tax and subsidy reforms could lead to widespread closures of family farms, with serious consequences for rural communities and national food security.
Final Thoughts
UK farming is going through big changes. While the government’s goals to modernise agriculture and promote sustainability are important, it’s crucial to consider the impact on farmers. Family farms are vital to food production, rural economies, and the environment. Policymakers, farmers, and industry leaders need to work together to make sure these changes help, not harm, the farming community.
As these policies take effect, staying informed is key. Farmers and related businesses must adapt and find new ways to thrive during this period of change.
