Wales’ farming unions say budget changes will lead to lasting damage to Welsh farming

Wales’ farming unions say budget changes will lead to lasting damage to Welsh farming and the break-up of family farms.

The Farmers’ Union of Wales has expressed grave concerns following the announcement by the Chancellor of Exchequer in the Autumn Budget that Agricultural Property Relief (APR) will be reformed from 2026, leaving the future of many Welsh farms in the balance.

While the National Farmers Union Cymru says the ‘misguided and ill-thought out’ reforms will also leave farmers with neither the means, confidence nor the incentive to invest in the future of their business,

During the Budget, it was announced that the 100% rate tax relief will come to an end for businesses and land worth over £1 million in the agricultural sector from April 2026. The current 100% rate of relief will continue for combined agricultural and business under £1 million, but for assets over £1 million, inheritance tax will apply with 50% relief, at an effective rate of 20%.

This reform is likely to affect a majority of Welsh family farms,

said: “The FUW has previously warned that changes to the agricultural property relief would have an impact on the viability of family farms and our rural communities - as well as adverse consequential effects for related businesses and employment.

“We know the average size of farm holdings in Wales is around 120 acres - with even conservative estimates of land worth and buildings putting most farms at over £1 million in asset value. 

“Agricultural Property Relief has long played an essential role to ensure those who inherit agricultural holdings are not crippled by taxes when family farms are passed from one generation to the next.

“We await further details regarding APR and what the announcement today means for Welsh Government budgets, but at a challenging period for farming in Wales, this news will add further uncertainty to farm businesses doing their utmost to produce food and enhance the environment.”

Members concerned about this issue should contact their local FUW county office for advice from the partner agent RDP Law.

“Misguided and ill-thought-out reforms to Agricultural Property Relief (APR) and Business Property Relief (BPR) will not only lead to lasting damage to Welsh farming and the break-up of family farms, but will also leave farmers with neither the means, confidence nor the incentive to invest in the future of their business,” says NFU Cymru.

NFU Cymru President Aled Jones said: “The changes announced are not only a threat to our family farm structure and our tenanted sector but also to our nation’s food security. 

“The sort of restructuring we are likely to see in response to these changes is likely to mean there will be less land available for tenancies and contracts, the lifeblood of small family farm businesses and a critical point of entry for young and first-time farmers.

“NFU Cymru has written to the Chancellor twice and all Welsh MPs on this issue. In addition, the union and its members have raised this extensively when we have met with politicians at party conferences as well as in their constituencies. Despite all of these efforts, today’s budget confirms the UK Government’s intention to reform these reliefs and that will come as very disturbing news to farming families the length and breadth of Wales. This also goes against the previous assurance given by the Defra Secretary of State that the Labour Party had no plans to change Inheritance Tax, including APR.

“This tax-raid on agricultural property and businesses is misguided and will seriously harm our family farms, rural communities and our ability to produce affordable food for the nation, whilst delivering negligible revenue to the Treasury in terms of overall government spending.

“The changes announced today will see agricultural assets over £1m attract an inheritance tax at a rate of 20% from April 2026, something which will bring the majority of Wales’ family farms into the scope of this tax. Just because a family farm may look like a valuable asset on paper, that doesn’t mean those who work it are wealthy and able to meet a large tax bill.

“Whilst there is typically a lot of capital involved in farm businesses, the return on the capital employed in farming, after taking into account a wage for the farmer, averages less than 1%. Such a rate of return is completely insufficient to pay an inheritance tax charge of 20% upon the generational transfer of that farm. Unless we see an urgent reconsideration by the UK Government, I am afraid we are going to see the breakup of multi-generational family farms.”