In a dramatic policy reversal, Chancellor Rachel Reeves has abandoned plans to scrap agricultural inheritance tax reliefs following intense criticism from farmers and rural communities. The so-called 'tractor tax' proposal would have removed valuable tax breaks that have protected family farms for generations.
Swift Backtrack After Farmer Backlash
The Labour government faced immediate outrage after suggesting the removal of Agricultural Property Relief (APR) and Business Relief (BR), which currently allow farms to be passed down without incurring massive inheritance tax bills. Farmers warned the changes could force the breakup of family-run agricultural businesses.
Reeves: 'Listening to Rural Concerns'
The Chancellor stated: 'We have listened to the concerns of farmers and rural communities. The government will not be removing agricultural inheritance tax reliefs.' This marks one of Labour's first major policy U-turns since taking office.
What the Tax Reliefs Protect
The threatened reliefs currently:
- Allow farms to be passed to heirs without inheritance tax on agricultural land and property
- Protect the value of farm businesses when transferred between generations
- Help maintain the UK's family farming tradition
Agricultural leaders welcomed the reversal, though some remain wary of future tax policy changes affecting rural businesses.
