Efra chairman urges PM to review family farm tax plans

Liberal Democrat MP Alistair Carmichael has urged the government to broaden its consultation on changes to farm inheritance tax, calling for a “sensible debate” to protect family farms while targeting tax loopholes used by the super-rich.

Speaking during an urgent question in parliament, Mr Carmichael, who chairs the cross-party Environment, Food and Rural Affairs (Efra) select committee, criticised the government’s decision to impose a 20% tax on agricultural assets from April 2026 without a full consultation

He cited a report from the Office for Budget Responsibility that raised concerns over the practicality and impact of the changes, noting that the policy could harm farmers without providing significant benefits to the Treasury.

See also: OBR casts doubt on government’s farm IHT figures

“One of the witnesses to the select committee told us that the changes ‘hit the people they say they are protecting and protect the people they say they are hitting’,” Mr Carmichael said, urging the government to engage with farming communities.

“We need a reform that stops the super-rich from sheltering their wealth while still protecting family farms.”

His comments follow increasing opposition to the policy, including from several supermarkets – Morrisons, Asda, Tesco, Aldi, Lidl, the Co-op, and now Waitrose and Ocado.

“The fact that major supermarkets have now come out against the government’s plans should be a further sign of how badly wrong they have gone,” Mr Carmichael added.

Mr Carmichael, the MP for Orkney and Shetland, has written to prime minister Keir Starmer to request an urgent meeting to discuss the government’s farm IHT plans.

He has also written separately to Defra secretary Steve Reed on the strategy required to improve confidence for the farming sector.

Industry approval

NFU president Tom Bradshaw welcomed the Efra committee’s support for a consultation on the policy, highlighting the potentially devastating impact of the IHT policy on family farms.

“Our analysis shows 75% of family farm businesses could be affected,” he said. “And the OBR confirmed it would leave elderly farmers exposed.”

The Tenant Farmers Association (TFA) chief executive George Dunn criticised the lack of government engagement on the issue, which has caused frustration within the farming community.

“The government must engage properly rather than stonewalling,” said Mr Dunn, urging a broader consultation to address concerns over tax thresholds and the impact on elderly farmers.

The government, through Treasury minister James Murray, responded by assuring that the policy included measures to protect family farms, but Mr Carmichael and industry groups remain firm in their calls for further discussion and reform.

Pressure on Mr Starmer and chancellor Rachel Reeves to reverse the farm IHT policy will be ramped up by thousands of farmers when they take part in the NFU’s day of unity on Saturday 25 January to raise awareness among the public of its damaging impact on farm businesses.