UK farms could shrink ‘like Russian dolls’ amid tax row, government warned
The UK’s farms could be set to shrink “like Russian dolls”, the government has been warned, thanks to Labour’s inheritance tax changes announced in the Budget.
Shadow business secretary – and former City minister – Andrew Griffith has cautioned that the policy could mean “like Russian dolls, with each generation that passes, you end up with [farms] worth 80 per cent of what they were before”.
Speaking to the Taxpayers’ Alliance podcast, ‘A Nation of Taxpayers’, Griffith told host Duncan Barkes that he was unhappy with the government’s policy to reform agricultural inheritance tax (IHT) relief.
He said: “It’s absolutely wrong for Labour to pretend that [the tax] doesn’t capture every single farm.”
The government is embroiled in a row over their announcement that agricultural assets worth more than £1m would no longer be exempt from inheritance tax – which is also affecting family businesses.
From April 2026, a tax of 20 per cent would be raised on the value of inherited farming assets above £1m under the plans.
While this still represents a tax relief of 50 per cent compared to the standard rate, it has been attacked by unions and critics who argue it will make the UK more reliant on imports.
And speaking about Labour’s business policies generally, Griffith, who was appointed as Badenoch’s shadow business and trade secretary as she assembled her frontbench on Tuesday, also warned that: “Labour’s lack of understanding will crush small business.”
His comments came after Badenoch faced Sir Keir Starmer across the despatch box at her first Prime Minister’s Questions (PMQs) session as leader of the opposition.
During the exchange, the Tory leader referenced the Budget, stating: “We have heard him repeat the lines on the television, ‘fixing the foundations’, and so on.
“What does he say to farmers who are facing uncertainty about their futures as a result of the increased taxes announced by the Chancellor?”
She pledged the Conservatives would “reverse Labour’s cruel family farms tax” and asked Starmer to “reassure the farming community”.
But hitting back, Sir Keir responded: “I’m glad she’s raised farmers. Because the Budget last week put £5bn over the next two years into farming. That’s the single biggest increase, unlike the £300m which was underspent under the last government.
“But when it comes to inheritance, the vast vast majority of farmers will be unaffected, as she well knows; as they well know.”