Keir Starmer is set to revise the family farm tax in response to pressure from his backbenchers, marking another significant retreat.
The adjustment will raise the threshold for inheritance tax on farms from £1 million to £2.5 million, effectively reducing the number of impacted estates by half.
This decision adds to a series of reversals that have undermined the Prime Minister’s authority and sparked debates regarding his leadership capabilities.
In recent months, he has backtracked on commitments related to the winter fuel allowance, welfare reforms, and the two-child benefit cap, raising questions about his political longevity.
The latest reversal follows a situation where over 30 Labour MPs abstained from voting on the policy, with one member dissenting, resulting in their suspension from the party.
While campaigners have expressed approval of the U-turn, they argue it is insufficient and claim that farmers will not overlook the previous damage caused.
National Farmers’ Union (NFU) president Tom Bradshaw told BBC Radio 4’s World at One programme that he welcomed the changes to the ‘cruel tax’.
‘There’s going to be a sense of relief across many farming families right the way across the UK. Many can sleep easy this Christmas when otherwise they may not have been able to,’ he said.
A farmer drives their tractor with a ‘Save British Farming’ poster in Westminster earlier this month
Keir Starmer (pictured) will water down the family farm tax in yet another humiliating capitulation to his backbenchers
Sir Keir is understood to have intervened personally in the issue after meeting Mr Bradshaw ten days ago.
Gavin Lane, president of the Country Land and Business Association, said he would continue to fight to get the tax scrapped in its entirety.
‘This change will come as an enormous relief to thousands of family farms across the country who faced seeing their businesses taxed out of existence,’ he said.
‘But this announcement only limits the damage – it doesn’t eradicate it entirely.
‘Many family businesses will own enough expensive machinery and land to be valued above the threshold yet still operate on such narrow profit margins that this tax burden remains unaffordable.’
The Countryside Alliance’s Mo Metcalf-Fisher added: ‘This partial change to the disastrous family farm tax is welcome. It has caused months of unnecessary pain and suffering.
‘It’s clear the Government has realised that the growing perception that it is at war with the countryside is toxic.’
Jonathan Charlesworth, the son of a farmer who took his own life the day before the 2024 Budget in anticipation of the tax changes, said the U-turn was ‘a well-fought-for victory for our precious countryside and the custodians of it’.
Conservative leader Kemi Badenoch said it was a ‘huge U-turn by the Government’ on the ‘cruel, immoral’ plans.
Jonathan Charlesworth, pictured feeding cattle at his farm, accused the government of a ‘complete lack of understanding towards farming and the countryside in general’
Jeremy Clarkson joins thousands of farmers protesting in Whitehall in November
Tory environment spokesman Victoria Atkins said: ‘At long last, Labour has snuck out a partial U-turn on their vindictive family farm tax. It is too late for some, however. Businesses and lives have been lost. Rural communities will not forget the distress, pain and panic this Government has caused them.’
Chancellor Rachel Reeves announced in her maiden Budget last year that farmers would be subject to inheritance tax for the first time from April 2026. This would apply to farms worth more than £1million.
The announcement triggered 14 months of protests, with farmers descending on Westminster in their tractors and accusing Labour of declaring war on the countryside.
Following intense pressure, ministers announced yesterday that they would increase the threshold to £2.5million.
Growing disquiet on the party’s backbenches, coupled with this month’s animal welfare strategy which was received badly among rural pressure groups, prompted the backtracking.
An increasing number of Labour’s 100 MPs who represent rural seats had already protested against the changes, with one voting against the Government.
The party suspended Markus Campbell-Savours, who represents the rural seat of Penrith and Solway, and he now sits as an independent.
More than 30 Labour backbenchers abstained from the vote and were said to be planning further action to oppose the tax in the new year.
The climbdown came after ministers announced changes to animal welfare rules which could lead to British farmers being undercut by foreign rivals.
They pledged to ban cages for chickens and pigs by 2030 but will still allow the import of produce from abroad that doesn’t meet those standards, putting British farmers at a disadvantage.
Other changes such as the banning of trail hunting prompted questions about whether Labour had declared war on the countryside.
Yesterday’s U-turn came after a former head of the NFU warned of the impact of the hated tax in an official report commissioned by the Government.
Baroness Batters said farmers were ‘bewildered and frightened’ and it was the ‘single biggest issue they faced’.
Last week, Sir Keir was asked by MPs if he was aware of reports that some farmers with terminal illnesses were considering suicide before the tax kicks in next April.
He told the liaison committee he understood the concerns but defended the ‘sensible reform’.
There were also questions about whether the U-turn would be funded through tax rises given it was expected to raise £520million a year by 2029 and is now expected to raise only £300million.
The Government said it had ‘listened’ to the concerns of the farming community and ‘carefully considered’ the feedback.
It claimed the number of farms affected by the reforms in 2026-27 would halve from 375 to 185.
Environment Secretary Emma Reynolds said: ‘We have listened closely to farmers across the country and we are making changes today to protect more ordinary family farms.’
