Angela Rayner criticises 'scaremongering' over inheritance tax changes for farmers

20 November 2024, 12:20 | Updated: 20 November 2024, 13:55

Angela Rayner has criticised "scaremongering" over Labour's reforms to inheritance tax on farms.

The deputy prime minister had to defend the government's changes to the levy in a bruising House of Commons session, as she stood in for Sir Keir Starmer while the prime minister was away at a G20 summit.

It came a day after more than 10,000 farmers gathered in Westminster to protest against the announcement in last month's budget.

Politics latest: Rayner faces hostile crowd

The government will reduce inheritance tax relief applied to farms from 6 April 2026. The full 100% relief will only apply to the first £1m of property. Above this amount, landowners will pay inheritance tax at a reduced rate of 20%, rather than the standard 40%.

Farmers will still benefit from reductions, with Labour saying that a "typical" couple handing their estate to their children can gift up to £3m tax-free, and then pay the 20% tax. They will also have 10 years to pay the charge, interest-free.

However, many in agriculture have criticised the decision, and political parties from across the spectrum questioned Ms Rayner on it.

Daisy Cooper, the Liberal Democrat deputy leader and MP for St Albans in Hertfordshire, said farmers felt "betrayed" by the Conservative government and "lied to by Labour".

Ms Rayner said she was "sorry" to hear that farmers were "distressed by what I would say is scaremongering around what the Labour Party is doing".

Alex Burghart, the shadow chancellor for the Duchy of Lancaster, was standing in for Kemi Badenoch - as it is convention for the leader of the Opposition to stand aside from Prime Minister's Questions if the prime minister is away.

He asked Ms Rayner about a "typical, mid-sized, 360-acre" farm in Yorkshire - saying a family had spoken to their accountant and been told they could be liable to pay £500,000 in inheritance tax - equivalent to 12 years of profit.

The Tory MP added that the NFU is set to publish a report showing 75% of all commercial farms will fall above the threshold of paying inheritance tax.

Read more on farming:
Thousands protest at Downing Street
Jeremy Clarkson says govt should 'back down'

Ms Rayner says she "stands by the figures" the government had previously laid out.

She said: "The vast majority of estate owners will see no change and pay no tax on land valued at £1m.

"Couples can pass on £3m tax-free, and those above the thresholds will pay only half the normal rate, and can pay over ten years interest-free."