(Bloomberg) -- In November, thousands of British farmers gathered in Westminster, some maneuvering tractors around Parliament Square, protesting the Labour government's decision to impose an inheritance tax on their assets for the first time in over three decades.
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On Tuesday, they're returning to London for the National Farmers' Union annual conference, where anger against the levy is again expected to take center-stage.
Chancellor of the Exchequer Rachel Reeves' debut budget in October cut back an inheritance tax exemption on agricultural land. Under the new policy, farms valued over £1 million ($1.3 million) would face a 20% tax when handed down from one generation to the next. For couples passing on their estate together, the threshold will increase to £3 million when the policy takes effect in April 2026.
The dispute has become a major political headache for Prime Minister Keir Starmer, who has had a challenging first seven months in power, marked by dwindling approval rates. However, the government has held the line and a meeting with representatives of the farm sector last week ended in an impasse.
The Labour government is sending Steve Reed to address the conference, the secretary of state for environment, food and rural affairs who has become a lightning rod for criticism of the tax change. Reed this week revealed measures for more public sector bodies to buy British produce, in an effort to win favor with farmers.
The government stresses that only about 500 farms would qualify for the new tax each year, leaving the majority of the UK's farmers unaffected. According to the NFU, the number of holdings meeting the threshold will be higher and the policy threatens Britain's food security while unfairly targeting farming families, already facing high energy bills and post-Brexit trade fallout.
"They don't care about the intergenerational impact," NFU head Tom Bradshaw said after last week's meeting. "Food security should be on the top of everybody's agenda."