Why inheritance tax on farmers is bad for the UK economy.
Before discussing why, the inheritance tax on farmers harms the UK economy, I want to recognise that asset-rich farmers often lack sympathy from the general public. It may seem simple to assume that someone with a £ 3 million farm can pay £600,000 in inheritance tax, but this view overlooks the complex realities of farming. While I don't consider myself an expert, I've taken the time to understand this issue and believe that this tax is bad for the UK economy and inflationary.
According to the Food Security Report, in 2021, the UK produced about 60% of its domestic food consumption by economic value. It imported the rest, meaning the UK is a net food importer.
EU countries are the primary source of food imports, but the impact of the UK's departure from the EU on trade and domestic production is yet to be fully understood. According to a report from the United States Department of Agriculture (USDA), post-Brexit UK imports of foods have increased by nearly $14 billion. And this in part explains the high food inflation post-Brexit trade agreement since 2020. Reaching 19.2% in 2023 the highest in 45 years.
Farmers in the UK may be asset-rich but are also cash-poor. According to the farm business income report, in 2023/24, the average Farm Business Income (FBI) decreased for most farm types in England; cereal farms saw a significant drop of 73% in FBI, falling to £39,400 due to lower output prices and yields. Farming is not a business that generates high cash flow. This is why your average farm will struggle to pay for inheritance tax without having to sell parts of its land.
For most farmers, farming isn't just a job or a financial investment—it's a way of life. It's a legacy built over generations, rooted in tradition and resilience. Farmers don't see their land as an asset to be sold for profit; it's their livelihood, a source of security in tough times, and something to pass on to their children. This dedication to the land and the craft of food production is irreplaceable.
Farmers are highly skilled, with decades of experience that cannot be easily replicated. When a farm is sold because of financial pressures like inheritance tax, the loss isn't just personal; it's a blow to the country's ability to sustain itself. The ripple effects inevitably reach all of us through higher food prices and increased reliance on imported goods produced under conditions outside the UK's control.
UK farmers deserve far more understanding and support from the public and policymakers alike. These are not wealthy financiers or corporations exploiting tax loopholes; they are hardworking individuals who rise before dawn, endure harsh weather, and devote their lives to feeding the nation. They don't ask for special treatment, only fair recognition of their essential role. It's time we offered them the empathy and appreciation they have earned because when we support our farmers, we invest in our communities' future, economy, and food security.
