Rachel Reeves hit by Labour rural rebellion over inheritance tax on farmers

Chancellor Rachel Reeves has suffered another budget blow with a rebellion by rural Labour MPs over inheritance tax on farmers.

Speaking during the final day of the Commons debate on the budget, Labour backbenchers demanded a U-turn on the controversial proposals.

Plans to introduce a 20% tax on farm estates worth more than £1m from April have drawn protesters to London in their tens of thousands, with many fearing huge tax bills that would force small farms to sell up for good.

MPs voted on the so-called "family farms tax" just after 8pm on Tuesday, with dozens of Labour MPs appearing to have abstained, and one backbencher - borders MP Markus Campbell-Savours - voting against, alongside Conservative members.

In the vote, the fifth out of seven at the end of the budget debate, Labour's vote slumped from 371 in the first vote on tax changes, down by 44 votes to 327.

'Time to stand up for farmers'

The mini-mutiny followed a plea to Labour MPs from the National Farmers Union to abstain.

"To Labour MPs: We ask you to abstain on Budget Resolution 50," the NFU urged.

"With your help, we can show the government there is still time to get it right on the family farm tax. A policy with such cruel human costs demands change. Now is the time to stand up for the farmers you represent."

After the vote, NFU president Tom Bradshaw said: "The MPs who have shown their support are the rural representatives of the Labour Party. They represent the working people of the countryside and have spoken up on behalf of their constituents.

"It is vital that the chancellor and prime minister listen to the clear message they have delivered this evening. The next step in the fight against the family farm tax is removing the impact of this unjust and unfair policy on the most vulnerable members of our community."

The government comfortably won the vote by 327-182, a majority of 145. But the mini-mutiny served notice to the chancellor and Sir Keir Starmer that newly elected Labour MPs from the shires are prepared to rebel.

Speaking in the debate earlier, Mr Campbell-Savours said: "There remain deep concerns about the proposed changes to agricultural property relief (APR).

"Changes which leave many, not least elderly farmers, yet to make arrangements to transfer assets, devastated at the impact on their family farms."

Samantha Niblett, Labour MP for South Derbyshire abstained after telling MPs: "I do plead with the government to look again at APR inheritance tax.

"Most farmers are not wealthy land barons, they live hand to mouth on tiny, sometimes non-existent profit margins. Many were explicitly advised not to hand over their farm to children, (but) now face enormous, unexpected tax bills.

"We must acknowledge a difficult truth: we have lost the trust of our farmers, and they deserve our utmost respect, our honesty and our unwavering support."

Labour MPs from rural constituencies who did not vote included Tonia Antoniazzi (Gower), Julia Buckley (Shrewsbury), Torquil Crichton (Western Isles), Jonathan Davies (Mid Derbyshire), Maya Ellis (Ribble Valley), and Anna Gelderd (South East Cornwall), Ben Goldsborough (South Norfolk), Alison Hume (Scarborough and Whitby), Terry Jermy (South West Norfolk), Jayne Kirkham (Truro and Falmouth), Noah Law (St Austell and Newquay), Perran Moon, (Camborne and Redruth), Samantha Niblett (South Derbyshire), Jenny Riddell-Carpenter (Suffolk Coastal), Henry Tufnell (Mid and South Pembrokeshire), John Whitby (Derbyshire Dales) and Steve Witherden (Montgomeryshire and Glyndwr).

(c) Sky News 2025: Rachel Reeves hit by Labour rural rebellion over inheritance tax on farmers