Thousands of farms shutting as industry braces for inheritance tax raid

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Thousands of farms shutting as industry braces for inheritance tax raid

Farmers have taken to the streets to protest against the imposition of inheritance tax – Alishia Abodunde/Getty Images Europe

Thousands of farms are already disappearing

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to take effect in April.

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are closing down as are opening, according to analysis of Office for National Statistics (ONS) data by Cynergy Bank, as the gulf between company deaths and births widens.

In the final months of 2024, 1,370 businesses in agriculture, forestry and fishing shut their doors for good. Only 670 new companies were founded in the industry, less than half as many.

Over the past three years a total of 16,905 have closed in the industry, with 9,055 opening, leaving a net loss of 7,850 businesses.

Nick Fahy, the chief executive of Cynergy Bank, said it showed “a sobering picture of the *** business environment”.

He said: “The farming sector is worst hit. With only half of closing agricultural businesses being replaced, farmers are grappling with rising costs, labour shortages and the looming spectre of inheritance tax changes set to take effect in April.

“In stark contrast, sectors such as healthcare, real estate and education are thriving. These sectors highlight the potential for resilience and adaptation within the *** economy, even as agriculture faces significant headwinds.”

It comes as farmers protest the looming imposition of inheritance tax on the industry, a change announced by Ms Reeves, the Chancellor, in her October Budget.

Currently, they benefit from agricultural property relief which means family farms do not incur inheritance tax. From April, that relief will be cut back with the tax imposed at a rate of 20pc, above a £1m threshold, taking it half way to the usual headline rate of 40pc.

Combined with a similar change to business property relief, the Chancellor hopes this will raise around £500m per year.

Tom Bradshaw, the president of the National Farmers’ Union, said the ONS data on closures “underscores the severe challenges facing the *** agricultural sector”.

He said: “Farmers and growers are trying to make a living while navigating an increasingly volatile environment, exacerbated by fluctuating commodity prices, persisting cost pressures and unpredictable extreme weather in recent years.

“The burden of the family farm tax is also intensifying these challenges, threatening the ability for many family farms to pass on their legacy to the next generation.

“In my recent meeting with the Treasury, it was evident that our concerns about the tax went unheard. The Government must recognise that its stance is not only detrimental to farmers, but undermines food security for the entire nation.”

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Overall the ONS found 65,450 business births in the final quarter of last year across the nation as a whole, the lowest since its records began in 2017. Those creations were outnumbered by more than 69,000 business deaths.

For last year as a whole, almost 307,000 businesses were set up, the lowest on record. However that still outnumbered the nearly 298,000 closures, as other industries beyond agriculture kept growing.

A government spokesman said the reduction in agricultural property relief was “a fair and balanced approach which helps fix the public services we all rely on”.

He said: “For years farmers have been struggling to make a fair profit, faced spiralling costs and have been undercut by trade deals forcing thousands out of business.

“This Government recognises that food security is national security. That is why we are investing £5bn into farming over the next two years, the largest budget for sustainable food production in our country’s history.

“We are going further with reforms to boost profits for farmers by using the Government’s purchasing power to back British produce and reform planning rules on farms to support food production.”

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