Farm inheritance tax easing is “win for Montgomeryshire farmers”

A farming union and Montgomeryshire’s MP Steve Witherden have welcomed the UK Government’s major concession on its changes to Agricultural Property Relief and Business Property Relief, with the threshold increased from £1m to £2.5m.

Due to come into force in April 2026, the changes first outlined in the 2024 Autumn Budget would have meant an effective tax rate of 20% on agricultural assets valued over £1 million, which farming unions and some Welsh MPs claimed would disproportionately affect Welsh family farms.

At last month’s Autumn Budget, the Chancellor of the Exchequer confirmed a change to the spousal transfer allowance, which would allow married farmers to pass on a £5m allowance in agricultural or business assets.

The Finance Bill will be amended to put the change into law with 50% relief continuing to apply to qualifying assets over the new £2.5m threshold, meaning many family farms in Powys will no longer be liable to pay inheritance tax.

Earlier in December, over 30 Labour MPs, including Montgomeryshire and Glyndŵr MP Mr Witherden, abstained on Resolution 50 of the Finance Bill, which related to the APR changes, at the request of the National Farmers Union (NFU).

NFU President Tom Bradshaw said: “I would like to thank all those Labour backbench MPs that were contacted by farmers and growers and decided to stand by their constituents as demonstrated by the recent abstentions on the vote on Budget Resolution 50.

“While small in number, it was a significant and brave move for many,” he continued.

Steve Witherden MP raised concerns regarding the changes immediately after they were announced in November 24. In January 2025, he delivered a speech in Westminster Hall to raise the threshold.

Mr Witherden MP said last night: “This news will come as a huge relief to my farming constituents across Montgomeryshire and Glyndŵr, many of whom will no longer face the prospect of having to sell the family farm.

“I opposed these changes from the outset and back in January, publicly called on the government to raise the threshold.

“Thanks to tireless campaigning from farmers and pressure from backbench Labour MPs, that is exactly what will now happen. This is a major win for rural communities up and down the country.”