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Supermarket giants Tesco and Lidl have come out fighting for UK farmers, calling on Prime Minister Sir Keir Starmer to halt his inheritance tax reforms or risk the future of the sector.
British farmers have taken to the streets of London in recent months to protest against changes to inheritance tax relief announced in October’s budget, which will end decades of exemptions from death duties.
The reforms mean that landowners from April 2026 will be subject to a 20 per cent tax on farmland above a threshold of £1.3m to £3m, depending on whether they are married and own a home.
Ashwin Prasad, Tesco’s chief commercial officer, said on Wednesday that the UK’s biggest supermarket “fully understands” the concerns raised by “many smaller farms” that depended on agricultural property relief and business property relief .
“We will support calls by the National Farmers Union for a pause in the implementation of the policy while a full consultation takes place,” he added. “This is not just a debate about individual policies – the UK’s future food security is at stake.”
Lidl said it was “concerned that the recent changes to the IHT regime will affect the confidence of farmers and growers and deter the investment needed to build a resilient, productive and sustainable British food system”.
Meanwhile the Co-op Dairy Group, a group of milk suppliers, told members in a letter that it had “directly contacted the relevant government departments to communicate our hope that they will look again at the impact of . . . changes” and said he supported calls to halt the implementation of the policy.
Supermarkets themselves have drawn fire from farmers, with tractors parked this month at a number of big retailers across the country to raise awareness of the impact of the tax changes. On 16 January, supermarket Morrisons was granted a High Court injunction to block further protests.
Ahead of the October Budget, farm campaign groups criticized supermarkets for squeezing their margins with low food prices and undercutting them by not supporting local produce.
Earlier on Wednesday, the Office for Budget Responsibility published a brief costing of the IHT policy, estimating it would raise an extra £500m for the Treasury each year between 2027 and 2029, in line with government estimates.
But the fiscal watchdog noted that income would probably decline after seven years as farmers increasingly gifted their properties to children and modified their tax planning strategies.
The OBR also suggested it would be “more difficult for some older individuals to quickly restructure their jobs” in terms of succession planning to fit the new measures.
Victoria Atkins, the Conservative shadow environment secretary, said the government had “chosen to destroy British family farming for little return. The OBR is clear that it will be almost impossible for older farmers to quickly restructure their jobs in response to this retaliatory tax.”
Farmers say the sector was struggling with climate change pressures, real subsidy cuts, high inflation, tight margins and the prospect of increased competition as the UK hammers out post-Brexit trade deals before Chancellor Rachel Reeves announced the IHT changes. .
The exemption was introduced in the 1980s to allow farms to stay in the same family after the death of an owner, a trend many have warned will become much more difficult. However, it has helped drive up the price of fields as wealthy individuals have purchased farmland as a form of legal tax avoidance.
Farmers looking to pass on their estate and their spouses are each entitled to £1m of relief before they start paying IHT on their land, on top of the usual inheritance allowances.
Given that couples already enjoy a threshold of £1m on their assets, this means two spouses would enjoy a threshold closer to £3m, officials have noted.
A government spokesman said: “Our reform of farm and business property relief will mean estates will pay a reduced rate of inheritance tax of 20%, rather than the standard 40%, and payments can be spread over 10 years, interest free.
“This is a fair and balanced approach which fixes the public services we all rely on, affecting around 500 properties next year.”
