Devon farmers warn inheritance tax changes could put family farms at risk

Farmers in North Devon have voiced concern that potential changes to inheritance tax could threaten the future of family-run farms, as Chancellor Rachel Reeves prepares to deliver her Autumn Budget on 26 November.

The Treasury is understood to be considering a series of reforms that could reshape the way wealth is passed on between generations. 

Among the proposals reportedly under review are a lifetime cap on the value of gifts that can be given tax-free, possible extensions to the current seven-year rule for gifts before death, and changes to taper relief, the discount applied when someone survives for several years after making a gift.

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At present, gifts made more than seven years before death are free of inheritance tax. Officials are said to be weighing whether that period should rise to ten years or longer, and whether a lifetime cap of about £100,000 should apply to gifts before they are taxed.

For farmers, these discussions follow an announcement made in the Autumn Budget 2024, when the government confirmed a major reform to Agricultural Property Relief (APR) and Business Property Relief (BPR).

The previous Budget had laid out that from April 2026, the current 100 per cent relief on agricultural and business property will be capped at £1 million across an estate. 

Above that combined threshold, only 50 per cent relief will apply, effectively introducing a 20 per cent tax charge on value exceeding the limit.

The Treasury said the measure was designed to “modernise and target reliefs” to ensure the system remained fair, while still supporting family enterprises.

But in rural parts of Devon, where farms have often been in the same family for generations, the proposals have caused deep anxiety.

Councillor Cheryl Cottle-Hunkin, Cabinet Member for Rural Affairs and Broadband at Devon County Council and a fifth-generation farmer, said tighter inheritance-tax rules could make it “even harder” for young people to take over family farms.

“Farming isn’t just a business, it’s a legacy and a way of life,” she said.

“Here in North Devon, many farms have been in families for many generations, and changes to inheritance tax or lifetime gift rules are putting that continuity even further at risk.

ABOVE: A young Cheryl Cottle-Hunkin on her family farm in North Devon, where she grew up helping with the animals. She says passing farms to the next generation is under threat from potential inheritance tax changes.
Photo credit: Cheryl Cottle-Hunkin

“If the government introduces even tighter restrictions affecting inheritance planning, it will make it harder for young people to take over, forcing families to sell land or assets to cover tax bills. That could make farms unviable and lead to the sale of family farms across the country.”

She warned that land sold under pressure might be acquired by large corporations seeking biodiversity-offsetting sites, saying: “That would be devastating, not just for individual families and rural communities, but for the future landscape and economy of our whole region.”

Government data show that only around 4 per cent of estates in the UK currently pay inheritance tax, but the number is rising because tax-free thresholds have been frozen since 2020.

Analysts estimate that the 2024 Budget’s inheritance-tax reforms will raise more than £2 billion by the end of the forecast period.

For many farmers, however, the issue is less about wealth than liquidity. 

Agricultural holdings can be asset-rich but cash-poor, meaning a large inheritance-tax bill could force sales of land or livestock simply to pay it.

ABOVE: Cllr Cheryl Cottle-Hunkin’s father with her children on the North Devon family farm. She says proposed inheritance tax changes could make it harder for future generations to take over family farms.
Photo credit: Cheryl Cottle-Hunkin

Cllr Cottle-Hunkin said the emotional and financial toll should not be underestimated: “Recent surveys show that half of UK farmers are considering quitting under mounting financial and mental-health pressures. We urgently need policies that protect generational farming and our rural economy, not ones that make it harder for rural communities to thrive.”

Devon County Council has been working with the National Farmers’ Union and other organisations to lobby central government for adjustments to the proposals. 

Cllr Cottle-Hunkin said the council is calling for a reversal of what many in the industry have dubbed the “family farm tax” and for alternative measures that would target tax avoidance without penalising active farmers.

She is also pressing for the reinstatement of funding for the Sustainable Farming Incentive and rural mental-health services, as well as renewed support for the Federation of Young Farmers Clubs, both of which, she said, were “vital lifelines” that have seen cuts this year.

Later this month, she plans to join thousands of farmers and rural campaigners at the “Day of Unity” rally in London on 24 November, where they will urge ministers to reconsider.

Until the Chancellor delivers her statement, the precise details remain unconfirmed. 

The Treasury is expected to publish further consultation documents on how the new relief cap will apply to trusts and lifetime gifts.

In North Devon and other rural regions, the farming community says it will be looking closely at the Chancellor’s statement to see what it means for the future of family-run agriculture