A wave of criticism has met the Government’s increased tax pressure on farmers.

The imposition of an inheritance tax charge of 20 per cent in Labour’s Budget could mean families selling land rather than passing it on to their children.

National Farmers Union uplands rep Mat Cole, who farms at Greenwell near Yelverton, said he feared the removal of the agricultural land tax relief could lead to less family farming businesses. Farmers’ families in most cases could not afford to carry the debt the tax would inflict at the same time as losing a loved one, he said

He said he understood the Government needs to raise income, but the land value threshold was too low at £1m and would put the burden on the majority of smaller family farms. A fairer policy, he suggested, would be higher thresholds on businesses and investors using agricultural property relief to avoid inheritance tax. 

Mat said: “On the face of it £1m sounds high. But with land values at £12,000 an acre and a viable smaller livestock farm needing to be 300 acres, values soon accumulate. On top of that value are the debts that most farm have, which in the end, doesn’t leave a very attractive proposition for most farmers to hand over to their families, especially when the tax is due at a time when the farmer and family member has just died.

“If I got ill now or suddenly died, then my family would have to find about £300,000 immediately on taking over the farm. The value of a farm to me is what it can earn me over the year and not the face value of the land.” 

He said a succession plan was now more essential, enabling his two children (aged 13 and 11) to inherit a viable business: “Otherwise the majority of farms owned by families will go out of businesses and sold to investors or ‘green banks.”

“In the long-term it could lead to a drastic cut in the UK’s home-produced food and more being imported. Would that be a palatable outcome for the public? Surely the future is for a sustainable homegrown agricultural industry delivering a thriving landscape and nature and not having to transport food long distances, offshoring damage to the environment."

Rebecca Smith, SW Devon MP (Con). said; “This tax will deal a hammer blow to the ambition of maintaining viable farms and food security, any thoughts of leaving family farms to the next generation will be reconsidered, and we run the risk of our vital farms being broken up for parcels of land.”

Sir Geoffrey Cox Torridge and Tavistock MP (Con), said: “The changes to agricultural property relief in particular are a body blow to family farms and rural communities and a betrayal of Labour’s promises at the election that it would not cut the relief.”

Victoria Vyvyan, president of the Country Land and Business Association, said the measure could harm 70,000 UK family farms, family, destabilise food security and jeopardise related rural businesses.