The number of UK farms closing has reached an all-time high following Chancellor Rachel Reeves’ controversial extension of inheritance tax, which critics claim is devastating family-run agricultural businesses.
According to the Office for National Statistics (ONS), 6,365 agriculture, forestry, and fishing enterprises have ceased trading over the past 12 months—the highest figure since quarterly records began in 2017.
Critics Slam ‘Tractor Tax’ as Supermarkets Back Farmers
The policy, dubbed a ‘tractor tax’ by opponents, has sparked widespread backlash across the agricultural sector.
Major supermarket chains have joined farming unions in calling on the Chancellor to reconsider the move, warning it could trigger the collapse of countless rural livelihoods.
The Office for Budget Responsibility (OBR) has also raised concerns, warning the measure may generate far less than its projected £500 million a year, assigning the revenue estimate a “high” level of uncertainty, particularly beyond the seventh year.
Industry Confidence at ‘Rock Bottom’
Shadow Environment Secretary Victoria Atkins blamed the closures on “Labour’s disastrous tax policies”, while Tom Bradshaw, President of the National Farmers’ Union (NFU), said confidence in the sector was “at rock bottom”.
“It’s no surprise farmers feel undervalued and unsupported,” said Bradshaw. “Many are now making the heartbreaking decision to sell, simply because they can no longer make a sustainable living from the land.”
Victoria Vyvyan, President of the Country Land and Business Association (CLA), warned that rural businesses are being “pushed to the edge”, citing excessive regulation, rising National Insurance, and a lack of meaningful government support.
“Grit alone isn’t a strategy,” she said. “What’s urgently needed is stability, clarity, and a government that listens—before more farms are lost forever.”
New Tax Threshold Threatens Family Farms
The changes mean farms valued at over £1 million could face a 20% inheritance tax charge.
While the Treasury claims that with existing reliefs only farms worth more than £3 million would be impacted—affecting just 28% of holdings—Defra data suggests up to 66% of family farms could be caught in the net.
In protest, thousands of farmers marched on Westminster last November, bringing central London to a standstill and demanding that the tax reform be scrapped.
Government Defends Support for Farming Sector
A spokesperson for the Department for Environment, Food and Rural Affairs (Defra) defended the government’s record: “Our commitment to farming and food security is unwavering.”
“UK farm profits rose by £1.6 billion last year. We’re reducing export red tape, and Baroness Minette Batters has been appointed to lead on reform proposals to strengthen farmer profitability.”
The department also highlighted efforts to boost public sector food procurement from British farms across schools, hospitals, and prisons.
