Farmers may win partial inheritance tax U-tum

New inheritance tax rules for farmers could be changed to make it easier for those over 80 to hand down their farm without incurring the tax, in what would be a partial climbdown by the government after a bruising row with farmers and a huge protest march in Westminster on Tuesday.

- Helena Horton, Anna Isaac

The Treasury is understood to be assessing the impact of changes, including amending gifting rules for farmers over 80 so that they can pass on their farm to their family without having to live for seven years after making the gift.

Officials are also under- 00 stood to be assessing the impact of changes announced in the budget in October on active small and medium-sized farms compared with smallholdings.

Labour has come under attack after Rachel Reeves announced in her budget last month that farms worth more than £1m could be subject to 20% inheritance tax (IHT). Labour had previously promised no changes would be made to agricultural property relief (APR), which exempted farmers from inheritance tax.

Farmers met Treasury officials yesterday and proposed that older farmers should be exempt from gifting rules which, under the budget plans, would mean that if they died less than seven years after passing the farm to relatives they would have to pay IHT. Farmers say the tax could wipe out many of their businesses.

Labour has tried to target the policy at wealthy investors buying land to avoid IHT, who have been blamed for driving up land prices.