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Major supermarkets Tesco and Lidl have come out in defense of UK farmers, calling on Prime Minister Sir Keir Starmer to halt his inheritance tax reforms or risk the future of the sector at risk.
British farmers have taken to the streets in London in recent months to protest changes to inheritance tax breaks announced in the October Budget, which will end decades of death duty relief.
The reforms mean that from April 2026 landowners will be subject to a 20 per cent tax on agricultural land above a threshold of between £1.3 million and £3 million, depending on whether they are married and if they own a home.
Tesco's chief commercial officer, Ashwin Prasad, said on Wednesday that the UK's largest supermarket “fully understands” the concerns raised by “many small farms” that were relying on farm property relief and commercial property relief.
He added: “We will support the National Farmers Union’s calls to halt implementation of the policy, pending full consultations.” “This is not just a debate about individual policies – the UK’s future food security is at stake.”
Lidl said it was “concerned that the recent changes to the IHT system will impact farmer and grower confidence and hamper the investment needed to build a resilient, productive and sustainable British food system”.
Meanwhile, the Co-op Dairy Group, a group of milk suppliers, told members in a letter that it had “directly contacted the relevant government departments to express our hope that they will again consider the impact of . . . the changes” and said it supported calls for a halt to implementation. Policy temporarily.
Supermarkets themselves have drawn criticism from farmers, with tractors parked this month at a number of major retailers across the country to raise awareness of the impact of the tax changes. On 16 January, Morrisons supermarket was granted a High Court injunction to prevent further protests.
Ahead of the October Budget, farm campaign groups criticized supermarkets for squeezing their margins through low food prices and undercutting them by not supporting local produce.
Earlier on Wednesday, the Office for Budget Responsibility released a short clip Cost estimation From IHT policy, it is estimated that it will raise an additional £500 million for the Treasury annually between 2027 and 2029, in line with government estimates.
But the FCA noted that revenues would likely fall after seven years as farmers increasingly gifted their assets to children and adjusted tax planning strategies.
The Office for Budget Responsibility also noted that it would be “difficult for some older individuals to quickly restructure their affairs” in terms of inheritance planning to adapt to the new procedures.
Victoria Atkins, the Conservative shadow environment secretary, said the government “has chosen to destroy British family farming for little return. The OBR is clear that it will be almost impossible for older farmers to quickly restructure their affairs in response to this retaliatory tax.”
Farmers say the sector has been suffering from the pressures of climate change, real subsidy cuts, rising inflation, thin profit margins and the prospect of increased competition as the UK strikes post-Brexit trade deals before Chancellor Rachel Reeves announces the IHT changes.
The exemption was introduced in the 1980s to allow farms to remain in the same family after the owner dies, a trend that many warned would become more difficult. However, it helped raise field prices as wealthy individuals purchased farmland as a form of legal tax evasion.
Farmers looking to move their property and spouses are entitled to £1 million of relief before they start paying IHT on their land, in addition to the usual inheritance allowances.
Officials pointed out that given that couples already have a minimum of £1 million in their estate, this means the couple will have a minimum of £3 million.
A Government spokesman said: “Our reform to agricultural and commercial property exemptions will mean estates will pay the reduced effective inheritance tax rate of 20%, rather than the standard 40%, and payments can be spread over 10 years, interest-free.
“This is a fair and balanced approach, which reforms the public services we all depend on, impacting around 500 properties next year.”
