A record number of farms have ceased operations in the year following the government's announcement to end a carve-out that allowed farmers to pass down their estates without incurring inheritance tax.
Official figures indicate that 6,365 agriculture, forestry and fishing businesses have closed over the past year, marking the highest number since records began in 2017, as reported by .
This increase has intensified scrutiny on the government's decision to terminate the Agricultural Property Relief – a long-standing inheritance tax relief that permitted tax-free transfer of farmland to the next generation.
The Chancellor argued that the relief was being exploited as a loophole by wealthy landowners to dodge the unpopular tax, announcing its cessation from April 2026, a move backed by several prominent economic think tanks.
However, the decision triggered protests nationwide, with farmers cautioning that it could lead to the demise of multi-generational farms in the º£½ÇÊÓƵ, while political adversaries labelled it 'the family farm tax.'
Tom Bradshaw, president of the National Farmers Union, commented that the surge in closures "underscores the challenges and lack of confidence" facing the º£½ÇÊÓƵ's agricultural sector.
"Cashflow pressures, extreme weather and global volatility are making it harder for farmers and growers to produce the nation's food and be profitable while doing it," he said. "And with the family farm tax, many are now facing the possibility of being taxed out of passing their farm to the next generation."
Inheritance tax change sparks net loss of 3,000 farms
Office for National Statistics figures, published on Friday, showed the bulk of closures over the past year occurred during the first half of 2025, following Rachel Reeves' announcement of her plan to scrap the inheritance tax relief.
Merely 3,190 enterprises in the sector launched during the same timeframe, resulting in a record net decline of over 3,000 businesses.
Olly Harrison, an arable farmer from the North West, said he could comprehend why farmers were opting to close their operations amid mounting operational and economic challenges such as the inheritance tax modification.
He told City AM: "Farming is difficult as it is, dealing with the many challenges the weather and nature throw at us. When the government throws you a bigger one than them all combined together, you might as well give up."
Under the modifications announced by the government last October, farms will maintain a preferential inheritance tax rate. Agricultural assets will only face a 20 per cent charge, and that rate will only apply on assets valued at more than £1m; a higher threshold than the £325,000 most estates are able to transfer tax free.
Ministers also argue that other inheritance tax exemptions – such as spousal relief – effectively raise the threshold for farmers to nearly £2m.
A spokesperson for the Department for the Environment, Food and Rural Affairs stated: "Our commitment to farming and food security is steadfast and farming profits in the º£½ÇÊÓƵ increased by £1.6 billion last year.
"We are slashing costs and red tape for food producers to export to the EU, have appointed former NFU president Baroness Minette Batters to recommend reforms to boost farmers' profits, and we're ensuring farmers get a bigger share of food contracts across our schools, hospitals, and prisons."
