Families in rural Britain are forced to "split up or sell" their farms, so here are five alternatives to Reeves' inheritance tax raid

According to one farmer in the Cotswolds, inheritance tax limits are now so low that they target small, operational family farms instead of focusing only on tax breaks

In a community with 90% agricultural land, farmers and local council members have urged chancellor Rachel Reeves to reconsider her inheritance tax plans. In an attempt to preserve family farms, they have put forth a number of alternatives in a letter to the chancellor.

The government has been urged to adopt "pragmatic, farmer-backed alternatives" after the Cotswold District Council warned that its inheritance tax (IHT) policy, which includes stricter regulations regarding agricultural property relief, could seriously harm farms in the area.

Inheritance tax relief includes agricultural property relief (APR). When farmland is transferred to the following generation, it lowers the inheritance tax that landowners and farmers must pay.

Reeves stated in the 2024 Budget that all inheritance tax benefits would be limited to the first one million dollars of combined business and agricultural property as of April 6, 2026. Over this sum, landowners are required to pay inheritance tax at an effective rate of up to 20%, which can be paid in interest-free installments over a ten-year period.

The reforms may be especially disastrous for family farms, according to Cotswold councillor Jeremy Theyer, a working farmer. "For farmers who have farmed their land for generations, it is devastating to consider that their children may have to sell a portion of it in order to cover a tax bill," he said.

The average family farm will be squeezed by this shift.

The Ackrill family is one farming family that might be impacted by the rule change. At Whittington's Boyd Farm, Steph Ackrill is a fourth-generation farmer. Steph took over the farm from her father, Ian Boyd, who had been farming the land for over a century.

A member of the Cotswold District Councils consultation was Steph's husband, Fred Ackrill. He claimed that although he didn't oppose the tax's idea, he thought it ran the risk of singling out the wrong farmers.

He stated, "It's really hard to make things pay as a small working farm."

"We've had to diversify into non-farming ventures, such as an educational facility, overnight guest cabins, and even a clothing line. We are putting in a lot of effort just to earn a living and make this a feasible option for us financially.

According to him, land prices are unnecessarily high in relation to the profits that farms can generate, and he was concerned that the taxes would hurt small, operational farms and force them to join larger conglomerates.

The typical family farm will be squeezed by this change, he continued, "and land will not be cared for the way it always has been." It will compel farms to be sold or divided up.

"I would prefer that the government take another look at their numbers. Instead of focusing only on tax loopholes and the larger, wealthier individuals or corporations that choose to evade taxes, the inheritance tax limits have come so low that they are now targeting small, working family farms.

What other possible options exist for Rachel Reeves' IHT policy?

Mike Evemy, the leader of the Cotswold District Council, wrote to the chancellor to express his understanding and support for the government's goal of establishing an equitable and efficient tax system. However, he stated that the council was worried about the "unintended consequences" that the proposals might have on rural areas.

Instead of bringing about reform, he said the proposals might "ruin" farmers, and he urged reconsideration.

In order to "protect family farms, support sustainable land management, and maintain the economic and environmental vitality of farms in Cotswolds and across the UK," the letter listed potential solutions.

These are some of the alternatives to the current policy that the councils have suggested.

In order to promote generational renewal, Councillor Theyer said: "These alternative proposals, particularly the idea of exempting farmers who are actively working the land or transitioning to sustainable practices, are the kind of policies that support farming families, along with the future of British agriculture." The proposal would also raise inheritance tax thresholds in high-value rural areas like the Cotswolds, waive inheritance tax on land held in continuous ownership for at least seven years, and provide a "pay if you sell" capital gains model instead of taxing on death.

The Treasury has been contacted for comment by BFIA.