Inheritance Tax relief changes could further reshape ‘under attack’ farming on Dartmoor

Changes to planned inheritance tax reforms affecting family farms and rural businesses could have a significant impact on Dartmoor and South West Devon, following a government announcement this week.

The government has confirmed that the threshold for Agricultural Property Relief and Business Property Relief will rise from £1 million to £2.5 million per estate when the reforms come into force in April 2026.

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Because the allowance can be transferred between spouses or civil partners, farming families will be able to pass on up to £5 million in qualifying agricultural or business assets before inheritance tax applies, in addition to existing nil-rate bands.

The changes were announced earlier today (Tuesday 23 December) by the Department for Environment, Food and Rural Affairs and HM Treasury, after ministers said they had listened to concerns raised by farmers and rural businesses.

Dartmoor is home to hundreds of family-run farms and commoners, with agriculture and land management playing a central role in the local economy, landscape and food production. 

The proposed reforms have therefore been closely watched across the moor and surrounding communities.

According to government figures, the revised threshold will halve the number of estates affected by the reforms in 2026-27, reducing the total from 375 to 185. 

Around 85 per cent of estates claiming agricultural property relief are expected to pay no additional inheritance tax.

Environment Secretary Emma Reynolds said the government wanted to protect ordinary family farms while ensuring the largest estates paid more.

“Farmers are at the heart of our food security and environmental stewardship,” she said. “We have listened closely to farmers across the country and we are making changes today to protect more ordinary family farms.”

The announcement follows a parliamentary vote last week, previously reported by this publication, which prompted strong reaction from Conservative representatives across Dartmoor and South West Devon.

During consideration of the Finance Bill, Labour MPs supported the next stage of the legislation, while Conservative MPs voted against it. 

Among them was Rebecca Smith, Conservative MP for South West Devon, whose constituency includes parts of Dartmoor, as previously reported by The Moorlander.

Responding to the revised plans, Ms Smith welcomed the higher threshold but described it as a government reversal.

“Since the moment Labour came into office, farmers have been under attack,” she said. “The Family Farm Tax threatened to hit generational farms with hefty bills just for passing the business on to their children.

“Raising the tax-free threshold to £2.5 million is a relief for families here in South West Devon, but it should never have come to this.”

She said the original proposals risked forcing rural families to sell land or break up long-established farms on and around Dartmoor to meet inheritance tax bills.

Ms Smith added that she would continue to campaign on behalf of local farmers and rural communities.

“I will keep standing up for South West Devon’s farmers and countryside communities,” she said. “They deserve certainty, respect and a government that understands the value of places like Dartmoor.”

The government has said the reforms are intended to create a fairer tax system while continuing to recognise the importance of agriculture and rural businesses to local communities and the wider economy.

An amendment reflecting the higher threshold is expected to be introduced to the Finance Bill in January, with full costs to be published by the Office for Budget Responsibility at a later date.

For farming families across Dartmoor and rural Devon, the outcome of the legislation remains a closely watched issue as it continues through Parliament.