Supermarkets support British farmers in their fight against changes to inheritance tax

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Supermarket giants Tesco and Lidl have taken up arms with UK farmers, calling on Prime Minister Sir Keir Starmer to halt inheritance tax reform or put the industry’s future at risk.

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

The reforms mean that landowners from April 2026 will be subject to a 20% tax on agricultural land above a threshold of between £1.3m and £3m, depending on whether they are married or not and whether they own a home or not.

Ashwin Prasad, Tesco’s commercial director, said on Wednesday that Britain’s biggest supermarket “absolutely understands[s]” concerns are raised by “many smaller farms” that rely on agricultural property support and business property support.

He added: “We would support the National Farmers Union’s call for a pause on the policy, while full consultation takes place.” “This is not just a debate about individual policies – the UK’s future food security is at stake.”

Lidl said it was “concerned that recent changes to the IHT regime will impact on the confidence of farmers and growers, and hold back the investment needed to build a food system He is flexible, productive and sustainable.”

Meanwhile, Co-op Dairy Group, a group of milk suppliers, wrote to members that they had “contacted the relevant government agencies directly to convey our hopes that they will review the impact of the epidemic. . . change” and said they supported the call for a temporary halt to the policy.

Supermarkets themselves have also been protested by farmers, with tractors parked at several major retailers across the country this month to raise awareness of the impact of tax changes. On 16 January, supermarket Morrisons was granted an injunction by the High Court to prevent further protests.

Ahead of October’s Budget, farm campaign groups criticized supermarkets for squeezing their margins on low food prices and discounting by not backing homegrown produce.

Earlier on Wednesday, the Office for Budget Responsibility released a short summary cost calculation of the IHT policy, it is estimated that it will raise an additional £500m for the Treasury annually between 2027 and 2029, in line with government estimates.

But the financial watchdog noted that the proceeds are likely to taper off after seven years as farmers increasingly gift their assets to children and revise their tax planning strategies.

The OBR also suggested that it will be “more difficult for some older individuals to quickly restructure their affairs” in terms of succession planning to adjust to the new measures.

Victoria Atkins, the Conservative Party’s shadow environment secretary, said the government had “chosen to destroy British family farming for little profit. The OBR makes clear that it will be almost impossible for older farmers to restructure their affairs quickly in response to this vindictive tax.”

Farmers say the sector is struggling with the pressures of climate change, real-time subsidy cuts, high inflation, thin profit margins and the prospect of increased competition as the UK reaches post-Brexit trade deals before chancellor Rachel Reeves announced IHT changes.

The exemption was introduced in the 1980s to allow farms to remain in the same family after the owner’s death, a trend that many warned would become much more difficult. However, it has contributed to driving up farm prices as wealthy individuals buy agricultural land as a form of legal tax evasion.

Farmers who want to transfer assets and their spouses are each eligible for a £1 million relief payment before they start paying IHT on their land, in addition to regular inheritance grants. often.

Officials have noted that the couples are already entitled to a threshold of £1m on their assets, which means the couple will be entitled to a threshold of almost £3m.

A government spokesman said: “Our reforms to farming and business property relief will mean estates will pay an effective inheritance tax rate of 20%, instead of the standard 40% and payments can be spread over 10 years, interest-free.

“This is a fair and balanced approach that will help fix the public services we all rely on, affecting around 500 neighborhoods next year.”