Lawyers question Starmer’s £3mn farm tax claim as “misleading”.

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Tax lawyers have questioned Sir Keir Starmer’s claim that a “typical family” farm will get a £3mn exemption from inheritance tax, calling it “misleading”.

The Prime Minister has repeatedly used the figure to defend the controversial Budget decision to impose inheritance duties on agricultural property above £1mn, saying earlier this month that “the limit is £3mn” in a “typical case of family”.

But lawyers argue that the state’s quota requires farmers to meet strict conditions, including the possibility of separating ownership of the farm when one spouse dies.

Emma Haley, legal director at law firm Boodle Hatfield, said: “The figure of £3mn that has been defrauded is not necessarily wrong, but it is misleading. “The problem is that there are different traps for reduce the amount that everyone has.”

The release is made of £1mn of agricultural property relief, due from April 2026; a fee of £325,000 for all categories of property; and £175,000 for passing the house on to children or grandchildren.

This equates to £1.5mn which can be passed on by a spouse directly to their children. Both partners will need to pass this to achieve the £3mn release.

However, if the farm is owned by a single person or an unmarried couple or a civil partnership, the £3mn threshold will not be met.

The homestead exemption is also reduced if the other partner’s share of the farm is worth more than £2mn, and is completely waived at £2.35mn.

This means that for a married couple to reach £3mn, the first spouse to die would have to leave £1mn of their estate to someone other than their spouse to avoid the second spouse’s estate being worth more than £ 2 min.

The result is that farm owners will probably have to be separated to receive the full subsidy.

“On the first death, you’re going to have to make sure you pass the property on to someone else and it’s going to be co-ownership,” said Haley at Boodle Hatfield. “It’s very sloppy.”

Camilla Wallace, senior partner at Wedlake Bell, said the £3mn figure “wouldn’t be realistic when you go down” and calculated that £2.65mn was a potential sum for the farms. as big as he can ask for.

The Treasury declined to comment. The government said the scheme, which applies to farms worth more than £1mn, will only apply to a quarter of commercial family farms. But the National Farmers’ Union said the real number is three-quarters of the farms.

Although most of the discussion about relief is aimed at farmers, it will be the same for business owners as the Budget changed the rules for business property relief (BPR) in the same way as for helping agricultural property. Family farms often have to use APR for their land and BPR for their livestock and machinery.

The Treasury has estimated that changes to APR and BPR will raise a total of £1.8bn by 2029-30. Figures by consultancy CBI Economics estimate that only £387mn of that figure could come from the APR.