Unlock Editor’s Digest for free
Roula Khalaf, editor-in-chief of the FT, selects her favorite stories in this weekly newsletter.
Major supermarkets Tesco and Lidl have spoken out in support of British farmers, calling on Prime Minister Sir Keir Starmer to halt his inheritance tax reforms or risk endangering the future of the sector.
British farmers have taken to the streets in London in recent months to protest against changes to inheritance tax relief announced in October’s budget, which will end decades of inheritance tax exemptions.
The reforms mean landowners will be subject to a 20% levy on farmland above a threshold of between £1.3m and £3m from April 2026, depending on whether they are married or not and whether they own a house.
Ashwin Prasad, Tesco’s chief commercial officer, said on Wednesday that the UK’s biggest supermarket “fully understands” the concerns raised by “many small farms” who rely on farm property support and assistance with commercial property.
“We will support calls from the National Farmers Union for a pause in the implementation of this policy while a thorough consultation is carried out,” he added. “This is not just a debate about individual policies: it is the UK’s future food security that is at stake.”
Lidl said it was “concerned that recent changes to the IHT regime will impact farmer and producer confidence and hamper the investment needed to build a resilient, productive and sustainable UK food system”.
Meanwhile, Co-op Dairy Group, a group of milk suppliers, told its members in a letter that it had “directly contacted the relevant government departments to express our hope that they will review the ‘impact of the crisis’. . . changes” and said he supported calls to suspend implementation of the policy.
Supermarkets themselves have attracted the attention of farmers, with tractors parked this month at a number of major retailers across the country to raise awareness of the impact of the tax changes. On January 16, Morrisons supermarket obtained a High Court injunction to block further protests.
Ahead of the October budget, farming campaign groups criticized supermarkets for squeezing margins with low food prices and undercutting them by not supporting locally grown produce.
Earlier Wednesday, the Office for Budget Responsibility issued a brief cost of the IHT policy, estimating that it would raise an additional £500 million for the Treasury per year between 2027 and 2029, in line with government estimates.
But the budget watchdog noted that revenues would likely decline after seven years, as farmers increasingly gift their properties to their children and change their tax planning strategies.
The OBR also suggested that it would be “more difficult for some older people to quickly restructure their affairs” in terms of estate planning to accommodate the new measures.
Victoria Atkins, the Conservative Party’s shadow environment secretary, said the government had “chosen to destroy Britain’s family farming for little return.” The OBR is clear that it will be almost impossible for older farmers to quickly restructure their businesses in response to this vindictive tax.”
Farmers say the sector was grappling with the pressures of climate change, real subsidy cuts, high inflation, razor-thin margins and the prospect of increased competition as the UK struck trade deals after the Brexit before Chancellor Rachel Reeves announces IHT changes. .
The exemption was introduced in the 1980s to allow farms to remain in the same family after the death of an owner, a trend that many believe will become much more difficult. However, this helped drive up the price of fields as wealthy individuals purchased farmland to avoid taxes.
Farmers wishing to pass on their estate, along with their spouses, are each entitled to £1 million of relief before they start paying IHT on their land, in addition to the usual inheritance allowances.
Given that couples already benefit from a £1m threshold on their estate, this means two spouses would benefit from a threshold closer to £3m, officials noted.
A government spokesperson said: “Our reform of agricultural and business property reliefs will mean that estates pay a reduced effective rate of inheritance tax of 20%, instead of the standard rate of 40%, and that payments can be spread over 10 years, without interest.
“This is a fair and balanced approach, which sets out the public services we all rely on and will affect around 500 areas next year.”