Cabinet split on disastrous inheritance tax raid on farms as Rachel Reeves slaps down calls for rethink

Cabinet tensions have surfaced today over Rachel Reeves dramatic Budget raid on farms.

The Chancellor used her package last month to impose inheritance tax on previously exempt agricultural estates worth over £1million, at a rate of 20 per cent.

But farmers have warned that move will be disastrous for the industry, wiping out family businesses that will be forced to sell to pay death duties. 

With damaging protests looming and many MPs saying their postboxes are full of complaints from constituents, Environment Secretary Steve Reed is said to have been pushing for the move to be watered down.

Options floated by Defra include exempting people over the age of 80 who will not have time to adjust their plans, according to the BBC. 

However, Ms Reeves has slapped down the idea. Treasury sources said it was not considering mitigations. 

Chancellor Rachel Reeves used her Budget last month to impose inheritance tax on previously exempt agricultural estates worth over £1million, at a rate of 20 per cent

Environment Secretary Steve Reed is said to have been pushing for the move to be watered down

The row comes with 10,000 farmers due in London next week for a march against the tax change.

Almost 2,000 are also expected to meet up with MPs in a mass lobbying event by the National Farmers Union on Tuesday.

There have even been threats of strikes that could hit supplies of meat, barley and oats.

Earlier this week Keir Starmer was forced to distance himself from a Labour ex-advisers claim that Britain doesnt need small farmers and could do without the industry.

The PM dismissed a suggestion by John McTernan, a former top aide to Tony Blair, that Labour could do to farmers what Margaret Thatcher did to the miners.

The senior figure, a prominent supporter of Sir Keir, had sparked outrage  among farming groups and senior Tories with his remarks.

A Treasury spokesman said: With public services crumbling, a £22billion fiscal hole inherited from the previous government and 40 per cent of Agricultural Property Relief going to the 7 per cent wealthiest claimants, we made a difficult decision to ensure the relief is fiscally sustainable.

Around 500 claims each year will be impacted and farm-owning couples can pass on up to £3m without paying any inheritance tax - this is a fair and balanced approach.

Farmers have warned that move will be disastrous for the industry, wiping out family businesses that will be forced to sell to pay death duties (pictured, a protest in Northumberland last week)