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Rachel Reeves defended her proposed ‘tractor tax’ after facing criticism from the former chief of the National Farmers Union (NFU), Minette Batters. The controversy arose after the chancellor claimed that only a small number of farms would be affected by the changes to inheritance tax on farms. However, Batters argued that the impact would be significant, impacting around 70% of farms.

The new policy, unveiled in the recent Budget, imposes a 20% inheritance tax on farms worth more than £1 million. This move, labeled as the ‘tractor tax’ or the ‘Old McDonald tax,’ has sparked concerns among farmers who are already grappling with challenges post-Brexit.

The farming community is facing additional financial burdens, including a 6.7% increase in the minimum wage and a 15% rise in employer national insurance contributions. Farmers feel betrayed by Sir Keir Starmer, who had promised a new relationship with the countryside and farmers during a 2023 speech to the NFU.

Baroness Batters warned that the proposed tax changes would make farming unaffordable for many families, potentially leading to the selling off of land. The changes to agricultural property relief (APR) and business property relief (BPR) set to take effect from April 2026 aim to generate more revenue for public services.

Rachel Reeves defended the reforms by emphasizing that the first £1 million of combined business and agricultural assets would still be exempt from inheritance tax. She assured farmers that only a small number of agricultural properties would be affected by the changes, offering details on how the tax could be paid over a 10-year period interest-free.

However, farmers like Gareth Wyn Jones expressed concerns about the impact of the tax changes on family farms. Jones, whose family has owned their farm for 375 years, fears that they may have to give up farming due to financial constraints. He highlighted the challenges faced by farmers who often work long hours for minimal returns.

Environment Secretary Steve Reed defended the policy change, stating that the majority of farmers would not be affected. He attributed the backlash to misleading headlines, emphasizing that only the wealthiest estates would bear the brunt of the tax. Despite the government’s reassurances, farmers remain skeptical about the future of family-owned farms under the new tax regime.

The proposed ‘tractor tax’ has ignited a heated debate within the farming community, with concerns raised about the financial viability of family farms. As the government pushes ahead with its tax reforms, farmers are bracing themselves for potential losses and tough decisions ahead. The agricultural sector faces an uncertain future as it navigates through the challenges brought about by changing tax policies and economic uncertainties.