NFU Scotland has urged the UK Government to rethink proposed inheritance tax reforms, warning they would have “severe and far-reaching consequences” for Scottish agriculture if introduced as drafted.
In a formal submission to HMRC on the Draft Finance Bill, the Union set out strong opposition to changes affecting Agricultural Property Relief (APR) and Business Property Relief (BPR), both of which play a key role in passing family farms from one generation to the next.
Jonnie Hall, Director of Policy at NFU Scotland, said the proposals risk creating widespread uncertainty.
“The Government claims its reforms are about fairness and sustainability, but the reality is quite different,” he said.
“These changes, even before implementation, are creating uncertainty and fear across our industry.
“They pose a serious threat to the continuity of family-run farm businesses and will undermine domestic food production and the future of our rural communities.”
The Union cited research by the Centre for the Analysis of Taxation (CenTax) showing the draft plans would hit family farms harder than diversified estates or landowners with agriculture as a secondary activity.
More than half of farming businesses would face higher inheritance tax bills, compared with just one in five non-farming landowners.
The CenTax study also warned that around 70 estates each year would be unable to meet tax liabilities even by selling non-farm assets, raising the risk of farm sales and business closures.
NFU Scotland said it supports alternative measures proposed by CenTax, including a “Minimum Share Rule” to safeguard genuine farm businesses, and an “Upper Limit on Relief” to cap the value of assets qualifying for tax breaks.
Together, these could generate nearly double the revenue of the Government’s plan without damaging family farms.
The Union also criticised the planned start date of April 2026 as “unrealistic and damaging”, calling for a delay until 2027 in line with the House of Commons EFRA Committee’s recommendations.
Beyond finances, NFU Scotland warned the reforms could worsen rural mental health, stall succession planning, and weaken food security if farmers are forced to break up or sell holdings.
“We’re not arguing against reform, we’re arguing for smart, fair, and workable reform,” Hall added.
“There are better ways to raise tax revenue without undermining an industry that is vital to Scotland’s economy, communities, and national food security.”
The Union is urging the Government to pause the current process, review the evidence, and work directly with farming organisations to design a fairer system.
