A record number of farms have closed in the wake of Rachel Reeves’s inheritance tax raid, new figures suggest.
In total 6,365 agriculture, forestry and fishing businesses have closed over the past year, the highest since quarterly data was first published in 2017, according to the Office for National Statistics.
The chancellor has faced a furious backlash over her decision to extend inheritance tax, which critics warn could sound the death knell for family farms in England.
All the major supermarkets have backed the farmers and called on Ms Reeves to halt her controversial ‘tractor tax’ plan. But ministers have ploughed ahead even though the Office for Budget Responsibility (OBR) has warned the policy may raise less than the Treasury hopes, with the £500m-a year-revenue forecast given a “high” uncertainty rating and likely to fall after seven years.
Victoria Atkins, the shadow environment secretary, said the latest figures showed farm closures were a result of “Labour’s disastrous tax policies”.
Tom Bradshaw, president of the National Farmers’ Union, said confidence in the industry was “at rock-bottom”.
He added: “It creates this continuing sense that the industry isn’t valued and its worth to the country isn’t being recognised. I can understand why the psychology is there that people will be taking the decisions that they may be resigned to sell off, and they are no longer able to make a living of it.”
Victoria Vyvyan, the president of the Country Land and Business Association, said rural businesses “are being pushed to the edge”.
“Farmers trying to modernise or diversify are blocked at every turn – by red tape, by National Insurance rises, by a government that talks growth while pulling out the foundations beneath it,” she said.
“Still, the countryside carries on. New businesses are opening. People are holding on. But grit isn’t a strategy. What’s needed now is simple: stability, clarity, and a government willing to listen – before more farms are lost and more families are forced out.”
The changes mean that farms valued at £1m or more would be liable for 20 per cent inheritance tax.
The Treasury says that, with tax allowances, in reality, only farms worth £3m would be affected, just 28 per cent of family farms. But official Defra figures appear to suggest as many as 66 per cent could be hit.
Thousands of farmers brought Westminster to a standstill in November when they descended on the capital to voice their opposition to the change.
A Department for Environment, Food & Rural Affairs spokesman said: “Our commitment to farming and food security is steadfast and farming profits in the UK increased by £1.6bn last year.
“We are slashing costs and red tape for food producers to export to the EU, have appointed former NFU president Baroness Minette Batters to recommend reforms to boost farmers’ profits, and we’re ensuring farmers get a bigger share of food contracts across our schools, hospitals, and prisons.”
