But now the tax is being imposed on farms worth more than £1 million, with an effective tax rate of 20 per cent on assets above the threshold, rather than the normal 40 per cent rate for inheritance tax.
According to the NFU, while farms may have a high nominal asset value – the value of their land and business assets – the returns from farming are often very low, so farming families may not have the reserves to pay for inheritance tax liabilities without selling off assets.
It said figures showed that 7 per cent of the wealthiest estates account for 40 per cent of the total value of agricultural property relief, costing the Treasury £219 million.
Previously, farming businesses qualified for 100 per cent relief on inheritance tax on agricultural property and business property.
Labour’s plan ensures an inheritance tax of 20 per cent is imposed on farmers’ agricultural assets worth more than £1 million.
