British farmers are being forced to supplement their income with other ventures in anticipation of the potentially crippling inheritance tax (IHT) changes. Currently, farmland and related buildings can qualify for 100% relief from IHT. However, new rules coming in 2026 will cap this relief at £1 million per estate, and any excess will be taxed at 20%. As a result, farmers are now scrambling to find new ways to bring in money before IHT must be paid, such as by turning their land into campsites for visitors.
Farmer Richard Watts of Moor Farm, which hosts a Feather Down Glamping site in Gloucestershire, said he faces “urgent challenges” that Labour have not addressed since announcing the IHT reforms. And while he acknowledged the importance of the “vital income” his glamping site provides, it is still not enough without increased Government support.
He told The Express: “At Moor Farm, diversification through our Feather Down Farms glamping site has provided vital income, but more support from the Government is necessary for the industry to grow.”
Andrew Wilkinson, Head of Inheritance Disputes at Shakespeare Martineau, explained that Richard is not the only farmer forced to find new cash flows, as holiday lets and farm shops become increasingly popular options.
He told the Express: “Farming families are right to explore new income streams. This includes rental income from holiday lets, farm shops, event venues, or other side businesses.”
However, Andrew warned that doing so may also present new challenges and could unintentionally increase the IHT payments on the land.
He added: “It is important for farmers to keep in mind that introducing new income streams or changing how their land is used could unintentionally shift the land’s classification from agricultural to commercial.
“If the land is no longer being used for agricultural purposes, the estate may no longer quality for Agricultural Property Relief which could significantly increase the inheritance tax amount.”
Richard explained that it is not just IHT changes that have put farms at risk, but it is one of many factors putting “immense pressure” on family businesses.
He added: “Last year’s Budget and the recent Spring Statement have failed to address the urgent challenges facing farmers.
“Rising costs in wages, National Insurance, and energy are putting immense pressure on small and family-run farms, while inheritance tax changes could force the sale of land, threatening long-term sustainability.”
The farmer called on Labour to implement three vital measures to “safeguard the future of British farming” and not leave others stranded without secondary sources of income.
He concluded: “The Government must prioritise targeted support, reform outdated tax policies, and commit to the NFU’s call for a dedicated agricultural budget to safeguard the future of British farming.”
