Defra has conducted no impact assessment of family farm tax

A Freedom of Information (FOI) request has revealed that Defra has carried out no analysis of the impact of the government’s inheritance tax (IHT) reforms on British farmers, dubbed the “family farm tax” by the NFU.

The Conservative Rural Forum (CRF) submitted an FOI request to the government department on 1 November and the response came back on 19 November – the same day thousands of farmers descended on London to demonstrate their fierce opposition to the changes.

As things stand, the Budget announcement means previously exempt farms worth more than £1m will have to pay IHT of 20% from April 2026.

See also: Farmers Weekly Podcast Ep 231: London ‘farm tax’ protest special

Defra was asked to produce analysis or estimates for the number of UK farms projected to be affected by these changes – and the amount of money they will pay.

The department was asked to reveal any assessment it had carried out on the impact of this policy on UK food security and the reinvestment capacity of farming businesses.

Defra was also asked if it had given consideration to the impact of its plans on the mental health and wellbeing of farmers, including any potential impacts on suicide rates, resulting from the changes.

The forum asked Defra to include any assessments, draft documents or meeting notes relating to the above three points.

Information ‘not held’ – Defra

In response, Defra said it had not carried out any of this work in relation to the tax change.

“The information that is requested is not held by Defra,” said the written response to the FOI request.

CRF policy director James Wright, a beef and sheep farmer based on Exmoor, said he was “extremely disappointed” to discover Defra had done no impact assessment of its IHT policy on farms.

“Without any data to back up their claims, the Labour government is gambling with the livelihoods of farming families and the future of the countryside,” he added.

“The fact that no research on farm inheritance tax has been done before implementing these reforms just shows that Labour is completely out of touch with farmers.”

The NFU, Country Land and Business Association and others have criticised the government for announcing the farm IHT plans without any consultation with the farming industry.

Both organisations have implored the government to carry out a full impact assessment of the reforms.

Defra secretary Steve Reed has defended his government’s farm plans, citing HMRC data from 2021 to support his claims.

‘Figures are robust’ – Reed

In a speech to the CLA’s annual conference in London on 21 November, Mr Reed said: “The Treasury’s figures are based on hard data from actual claims from the relief.

“This includes the impact not only of agricultural property relief, but also of business property relief. 

“And it shows that only 500 estates a year will be affected. This figure is endorsed and verified by the independent Office for Budget Responsibility.

“The figures are robust,” he insisted.   

Treasury reaction

A Treasury spokesperson said: “We have set out our modelling on the impacts of the changes to agricultural property relief at the Budget, and more recently the chancellor set out further details to the Treasury Select Committee.

“As is standard practice, we will publish further analysis of the impacts alongside the draft legislation expected in 2025.”

Meanwhile, media speculation is growing that the government may move to water down its farm IHT plans by exempting farmers aged 80 and above.

However, a Treasury spokesperson told Farmers Weekly that the government has no plans to make changes to the policy and is not considering any mitigations.