Supermarkets support UK farmers to fight inheritance tax changes

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Major supermarkets Tesco and Lidl have been fighting for UK farmers, with Prime Minister Sir Keir Starmer calling for an end to inheritance tax reforms or risking the sector’s future.

British farmers have taken to the streets of London in recent months to protest against changes to inheritance tax relief announced in the October Budget, which will end decades of exemptions from death duties.

The reforms mean owners will face a 20 per cent tax on farmland worth between £1.3mn and £3mn from April 2026, depending on the estate and owner.

Tesco chief commercial officer Ashwin Prasad said on Wednesday that the UK’s biggest supermarket was fully aware of the concerns raised by the “many small farms” that rely on agricultural property relief and commercial property relief.

“We call on the National Farmers’ Union to pause the implementation of the policy and we will support it when there is a full consultation,” he added. “This is not just a debate about individual policies – the UK’s future food security is at stake.”

Lidl said: “We are concerned that the recent changes to the IHT regime will affect farmer and farmer confidence and deter the investment needed to build a strong, productive and sustainable British food system.”

Meanwhile, the Co-op Dairy Group, a group of milk suppliers, said in a letter to its members that “in direct contact with the relevant government departments . . . “Changes” and supports calls to halt implementation of the policy.

Supermarkets themselves have come under fire from farmers, and this month tractors have stopped at several of the country’s major retailers to highlight the impact of the tax change. On 16 January, supermarket Morrisons was granted a High Court injunction to block further protests.

Ahead of the October Budget, farming campaign groups criticized supermarkets for squeezing their margins with low food prices and not supporting local produce.

Earlier Wednesday, the Office for Budget Responsibility released a briefing. Expenditure The IHT policy is expected to raise an extra £500mn each year for the Treasury between 2027 and 2029, according to government estimates.

But the fiscal watchdog pointed out that receipts could be delayed after seven years as farmers hand over their properties to children and improve their tax planning strategies.

The OBR also pointed out that “it will be more difficult for some older people to quickly set up their affairs” in estate planning to adapt to the new measures.

Victoria Atkins, Conservative shadow environment secretary, said the government “has chosen to destroy Britain’s family farm for little return. The OBR is clear that it will be impossible for older farmers to quickly restructure their affairs in response to this retaliatory tax.”

Farmers say the sector is struggling with climate change pressures, real-time subsidy cuts, high inflation and the prospect of competition as the UK hammers out post-Brexit trade deals. .

Liberalization began in the 1980s to keep farms in the same family after the death of the owner, a trend many warned would be too severe. However, the rich bought agricultural land to avoid legal taxes, which helped to increase the price of rice.

Farmers and their spouses who want to pass on their inheritance will each get £1mn relief before they start paying IHT on the normal inheritance allowance.

As married couples get £1mn on their assets, this means two married couples will get a cap of around £3mn, officials said.

A government spokesman said: “Our reform of agricultural and commercial property relief means estates will pay a reduced effective inheritance tax of 20% instead of the standard 40% and payments can be spread over 10 years interest-free.

“This is a fair and balanced approach, which will fix the public services we all rely on, which will affect around 500 properties next year.”