Chancellor Rachel Reeves has abandoned plans to impose a 20% inheritance tax on agricultural assets worth over £1 million, following months of protests by farmers. The U-turn, announced just before Christmas, raises the threshold to £2.5 million, protecting smaller family farms from the tax hike originally set for April 2026.
Environment Secretary Emma Reynolds said the government had listened to farmers and made changes to protect ordinary family farms, while larger estates would still contribute more. The policy reversal marks the 14th major U-turn by Labour since coming to power, with critics accusing the party of breaking manifesto pledges.
Other notable reversals include scrapping mandatory digital ID cards for workers, postponing local elections, and watering down business rate increases for pubs. The government has also dropped plans to nationalise energy firms, Royal Mail, and water companies, as well as a £28 billion green investment pledge and a bankers' bonus cap.
Labour chairwoman Anna Turley defended the U-turns, arguing they show a government that listens and responds to public concerns. However, Reform UK, which challenged the election postponement in court, has been awarded legal costs after the government backed down.
