What are the tax changes?

Since 1992, agricultural property relief (APR) has meant family farms have been passed down tax-free in a policy intended to bolster food security and keep people on the land. This tax exemption was made because farming is often not a lucrative business, and the work is difficult, so people often do it simply because it is the family business. If farmers sell up, this affects food security. The UK now produces less than 60% of the food its inhabitants eat.

Why does the government say they are needed?

Labour says those with the broadest shoulders should bear the largest tax burden in order to fix the UK’s creaking public services. The environment secretary says this change could raise £200m a year for the NHS and other services, and that the changes would not affect most farms. Steve Reed said: “Small family farms will not be affected. Only about 500 estates a year will pay more under the new scheme than they do today.”

Will it really affect just 500 farmers a year?

This claim comes from the number of estates that qualified for APR last year. Some say this is misleading, however, as the new rules roll together APR and business property relief, which used to give separate allowances for farmers – they could claim APR for their land, and BPR for all business assets such as farm machinery. Now, when farmers are given a £1m threshold – and a combine harvester can cost as much as £500,000 – you can see how BPR could eat this up.

The Treasury has worked out how many farms claimed APR last year but not how many farmers claimed BPR. So without these values added together, some say we cannot see the true picture of how many farms will qualify for the tax. The number of farmers affected will be higher, as they will both be rolled together with a ceiling of £1m, so those currently claiming for both separately will be unable to enjoy both exemptions in future.

Jeremy Moody from the Central Association of Agricultural Valuers, an association of 3,000 professionals who value farm estates, said: “For ministers to see an APR claim as the sum total of a farm is to miss the point that APR is only about land and buildings, leaving machinery, livestock, deadstock, other farming assets and diversified activities for BPR … The lack of data given for BPR claims is concerning when we seek an informed debate.”

The farming minister, Daniel Zeichner, has also said there is a “discrepancy” in the numbers, with the National Farmers’ Unionsaying Defra’s own figures show that 66% of the UK’s 209,000 farms are worth more than £1m and so potentially eligible to be taxed. Tom Bradshaw, the NFU president, said: “Far from protecting smaller family farms, which is what ministers say they’re doing, they’re actually protecting private houses in the country with a few acres let out for grazing while disproportionately hammering actual, food-producing farms, which are, on paper, much more valuable. Even Defra’s own figures show this, which is why they’re so different to the Treasury data this policy is based on.”

What are the political implications?

Labour has about 100 MPs with a rural aspect to their constituency. Many of these seats were won for the first time at the general election with fairly tight majorities. Labour peer Ann Mallalieu said the party had “sacrificed goodwill” with these constituencies and said people had told her they regretted voting for Labour.

After many years of being squeezed by supermarkets to the point where farmers get just 1p for every loaf of bread or block of cheese sold, and seeing their subsidies disappear after Brexit, farmers are desperate. Many are seeing their incomes plummet as extreme weather hits yields. Now, many fear being unable to pass on a viable business to their descendants.

James Rebanks, a sheep farmer,said: “The system has been exploitative and broken for decades. Long before [chancellor] Rachel Reeves entered the Treasury, farmers have been pulling the short straw. And much of the pain inflicted was courtesy of the Tories.”

Tom Lancaster, land, food and farming lead at the Energy and Climate Intelligence Unit, said the row “makes it harder for government to have a conversation with farmers on all the hard stuff we need them to do on net zero and climate adaptation, water quality and cleaner rivers, [and] nature recovery… [I]t’s the loss of this opportunity and collateral damage these reforms create that present the bigger cost for this government in the longer term.”

What are the alternatives?

In France, the only country in Europe with full food self-sufficiency meaning they do not have to rely on imports, farmers can access tax relief if they jump through administrative hoops to prove they work the land themselves.

Guy Singh-Watson, an organic farmer and founder of Riverford Organic vegetable boxes, who broadly supports the government’s plan, said: “Land in the French Vendée – where I have owned a 120-hectare (300-acre) farm for the past 15 years – is less than a 10th of the price of equivalent land in Devon, where I also farm. To be a farmer there, you have to be deemed fit to farm by the local administration. I doubt whether many landowners simply buying up farmland would pass that test.” He suggested a similar policy could be put in place in the UK, with true farmers given tax benefits.

Emily Norton, a dairy farmer and Farmers’ Weekly columnist, suggested that for elderly people who don’t have seven years to pass down their farm, which is the amount of time parents can pass down assets to their children tax-free before they die, the “government should, as a minimum, be underwriting insurance premiums for older landowners who are now looking to pass on assets but risk not surviving seven years. It’s not fair that they don’t have the chance to arrange their affairs as younger landowners may be able to.” Others have suggested exempting those over the age of 80 from the changes.

Some argue that separating APR and BPR again could make an important difference, while others have argued that Labour could raise £24bn a year from a 2% tax on wealth above £10m.