Supermarkets are backing UK farmers in their fight against inheritance tax changes

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Supermarkets Tesco and Lidl have come out to fight UK farmers, calling on Prime Minister Sir Keir Starmer to halt his tax reforms or risk the future of the sector.

British farmers have taken to the streets of London in recent months to protest against the changes to the inheritance tax relief announced in the October Budget, which will end decades of exemption from death duties.

The reforms mean that from April 2026 landowners will be taxed at 20 per cent on agricultural land above the threshold of £1.3mn and £3mn, depending on whether they are married or own a home.

Ashwin Prasad, chief commercial officer of Tesco, on Wednesday said that the UK supermarket “fully understands” the problems caused by “small farms” that depended on agricultural and commodity subsidies. of business.

He added: “We will support the National Farmers Union’s call to stop the implementation of this policy. “This is not just a debate about individual policies – the UK’s future food security is in danger.”

Lidl said it was “concerned that the latest changes to the IHT regime will affect farmer and grower confidence and prevent the investment needed to build Britain’s sustainable, productive and sustainable food system”.

Meanwhile the Co-op Dairy Group, the dairy group, told members in a letter that it had “directly contacted the relevant government departments to discuss our hope that they will reconsider the outcome of the . . . changes” and said it supported calls to halt the implementation of the policy.

Supermarkets themselves have drawn fire from farmers, and tractor trailers have this month been parked at many supermarkets around the country to raise awareness of the impact of the tax changes. On 16 January, supermarket chain Morrisons was granted a High Court injunction to prevent further protests.

Ahead of October’s Budget, farm campaign groups hit out at supermarkets for slashing their food prices and undercutting them by not subsidizing homegrown produce.

Earlier Wednesday, the Financial Accountability Office released the brief cost of the IHT scheme, which is estimated to raise an extra £500mn for the Treasury each year between 2027 and 2029, according to government estimates.

But financial watchdogs have noted that receipts will decline after seven years as farmers hand over their property to children and change their tax planning strategies.

The OBR has also suggested that it will be more difficult for some older people to organize their affairs quickly” in terms of estate planning to adapt to the new measures.

Victoria Atkins, the Conservative shadow environment secretary, said the government had “chosen to destroy British family farming to make it less profitable. The OBR is clear that it will be difficult for older farmers to reorganize the situation.” of them quickly in response to this retaliatory tax.”

Farmers say the sector is struggling with the pressures of climate change, real-time cuts in subsidies, rising commodity prices, thin margins and the prospect of increased competition as the UK attacks deals. of post-Brexit businesses before chancellor Rachel Reeves announced the IHT changes. .

This exemption was introduced in the 1980s to allow farms to remain in the same family after the death of the owner, a process that many have warned will become more difficult. However, it helped raise the price of land as wealthy people bought up farmland as a way to legally avoid taxes.

Farmers who want to transfer their property, and their spouses, are each entitled to £1mn of relief before they start paying IHT on their land, on top of the normal inheritance tax.

With the couple already enjoying £1mn in their estates that means the two partners will enjoy a margin of around £3mn, authorities have noted.

A government spokesman said: “Our reform of the agricultural and commercial property tax will mean that estates will pay an effective tax of 20%, instead of the usual 40%, and payments can distributed over 10 years, interest-free.

“This is a fair and balanced approach, fixing the public services we all depend on, affecting around 500 areas next year.”