Inheritance tax change 'a real threat to farming industry' in Wales
ITV Wales reporter Gwennan Campbell has the story.
Welsh farmers have described the proposed changes to inheritance tax rules laid out in the UK Government budget as a "betrayal".
Chancellor Rachel Reeves' changes mean farms worth more than £1million will now be subject to inheritance tax.
From April 2026 farmers will only be able to claim a 100% relief from inheritance tax on the first £1million of combined agricultural and business assets, falling to 50% beyond that.
She said the £1million band would help protect small farms, but a group representing landowners has described the decision as a "betrayal".
For years, the APR (Agricultural Property Relief) has enabled small family farms to be handed down over generations with some agricultural property free of inheritance tax.
According to the Country Land and Business Association, the average farm asset in Wales in £1.8m, but the average farm business income dropped to £24,000 this year per family.
Tom Homfray, vice-president of the CLA, said the move had "caused a huge amount of concern".
"Lots of family farms will be profoundly affected by this," he told ITV Cymru Wales. "A huge number of farms in Wales are valued on paper in excess of £1m, but by no means does that mean the farmers farming them have access to the funds to pay a potential tax liability.
"It's a real threat to the industry, it's a real threat to family-owned farms and it could lead to the fragmentation of a lot of these farms which people have been farming for generations."
The CLA claims that, by its initial calculations, the average farm in Wales will have to sell 10-15% of its land to fund the APR. They say this does not account for limited companies or other structures.
Llinos Medi, Plaid Cymru MP for Ynys Mon, said Reeves' move to apply inheritance tax to family farms will seriously threaten the rural economy in Wales.
"I am afraid that changes to rules on inheritance will seriously threaten Welsh family farms which are the backbone of the rural economy," she said.
Victoria Bond, director CLA Cymru said: “This is not a tax that affects a few ‘rich’ landowners as suggested by the Chancellor. It is a tax that strikes at the heartland of Wales, impacting the farms and communities that are essential to our rural economy.
"Most Welsh farms are generational, with families committed to sustaining the land, rather than seeing it as a realisable asset. This policy could force families to make impossible choices and risks the future of Welsh farming and the communities it supports.”
A Welsh Government spokesperson said: “Inheritance tax is a reserved tax, overseen by the UK Government. We will be making our spending decisions as we develop our Draft Budget in the weeks ahead. It will be published next month.”
Want a quick and expert briefing on the biggest news stories? Listen to our latest podcasts to find out What You Need To Know...