Tesco urges Rachel Reeves to backtrack on farming tax. (Image: PA)
Rachel Reeves is facing mountain pressure to backtrack on her ‘family farm tax’ as supermarket Tesco urges her to scrap the policy.
The retailer is backing farmers against the inheritance tax raid which could see 100s of small family farms across the country sell up or close. Tesco’s chief commercial officer warned the Chancellor that the “UK’s future food security is at stake”.
Tesco is not the only supermarket calling on Ms Reeves to U-turn on the tax as Lidl and the Co-Op, two other major retailers in the UK, called on her to pause the policy.
The fresh wave of pressure follows a new report by the Office for Budget Responsibility (OBR) warning that the levy may not raise as much money as the Chancellor hopes. Despite predictions the tax would rake in a staggering £500m a year, the forecast has been labelled with a “high” uncertainty rating.
Ashwin Prasad, Tesco’s chief commercial officer, said the economic stability of farms was “essential” to ensure customers “can continue to get the great quality food they want, at a price they can afford”.
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Farmers Protests were seen across the UK opposing changes to Inheritance Tax. (Image: Getty)
From April 2026, inherited agricultural assets worth more than £1m, which were previously exempt, will have to pay inheritance tax at 20%.
Many of the family run farms operate as asset rich but cash poor meaning they are unable to afford the tax bill from profits alone.
Since the announcement, the farming community has taken to the streets in protest. Many farmers have been seen to support a ‘French style’ action meaning the blocking of supermarket supply chains.
Mr Prasad said in a statement: “One message is loud and clear: farmers desperately need more certainty. After years of policy change, it has been harder than ever for them to plan ahead or to invest in their farms.
“One current area of uncertainty is the proposed change to inheritance tax relief. With many smaller farms relying on APR [agricultural property relief] and BPR [business property relief], we fully understand their concerns.
“It’s why we’ll be supporting the NFU’s calls for a pause in the implementation of the policy, while a full consultation is carried out.”
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Tesco said the economic stability of farms was “essential”. (Image: Getty)
Lidl echoed this: “We are concerned that the recent changes to the inheritance tax regime will impact farmer and grower confidence and hold back the investment needed to build a resilient, productive and sustainable British food system.
“We, therefore, support the call by the farming community to pause the implementation of those changes and to consult with industry to achieve a mutually beneficial outcome. We will be raising our concerns with government at any opportunity we get.”
Similarly, the Co-Op said they “have directly contacted relevant government departments to communicate our hope that they will look again at the impact of the … changes. We have also agreed to sign the UK farming unions’ letter going to the government imminently, to call for a reconsideration of the proposed tax changes.”
A government spokesperson said: “Our commitment to farmers remains steadfast – we have committed £5 billion to the farming budget over two years, including more money than ever for sustainable food production, and we are developing a 25-year farming roadmap, focusing on how to make the sector more profitable in the decades to come.
“Our reform to Agricultural and Business Property Reliefs will mean estates will pay a reduced effective inheritance tax rate of 20%, rather than 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 estates next year.”