Unlock Editor’s Digest for free

Roula Khalaf, Editor of the FT, selects her favorite stories in this weekly newsletter.

Supermarket giants Tesco and Lidl have come out to bat for UK farmers, calling on Prime Minister Sir Keir Starmer to halt his inheritance tax reforms or risk the future of the sector. .

British farmers have taken to the streets of London in recent months to protest against changes to inheritance tax relief announced in the October Budget, which will end decades of exemption from death duties.

The reforms mean that landowners from April 2026 will be subject to a 20 per cent tax on agricultural land above a threshold of between £1.3 million and £3 million, depending on whether they are married and if they have a house.

Ashwin Prasad, the chief commercial officer of Tesco, on Wednesday said that the UK’s biggest supermarket “fully understands(s)” the concerns raised by the “many small farms” that rely on the relief of agricultural property and business property relief.

“We will support the calls of the National Farmers Union for the suspension of the implementation of the policy, while a full consultation is carried out,” he added. “This is not just a debate about individual policies – the future of UK food security is at stake.”

Lidl said it was “concerned that the recent changes to the IHT regime will affect farmer and grower confidence and prevent the investment needed to build a strong, productive and sustainable food system in Britain”.

Meanwhile, the Co-op Dairy Group, a group of milk suppliers, told members in a letter that it had “directly contacted the relevant government departments to convey our hope that they will look into -also the effect of .

The supermarkets themselves are putting the farmers on fire, with tractors this month parked at several major retailers across the country to raise awareness of the impact of the tax changes. On 16 January, the supermarket Morrisons was granted an injunction by the High Court to block further protests.

Ahead of the October Budget, farm campaign groups criticized supermarkets for squeezing their margins with low food prices and undercutting them by not supporting homegrown produce.

On Wednesday, the Office for Budget Responsibility released a brief cost of the IHT policy, which estimates it could raise an extra £500m for the Treasury every year between 2027 and 2029, according to government estimates.

But the fiscal watchdog noted that receipts could be reduced after seven years as farmers increasingly gifted their assets to children and changed their tax planning strategies.

The OBR also suggested that “it will be more difficult for some older people to quickly restructure their activities” in terms of estate planning to adapt to the new measures.

Victoria Atkins, Conservative shadow environment secretary, said the government had “chosen to destroy British family farming for little return. The OBR has made it clear that it will be almost impossible for older farmers to quickly change- or their activities in response to this retaliatory tax.

Farmers say the sector is struggling with the pressures of climate change, real cuts to subsidies, high inflation, thin margins and the prospect of increased competition as the UK strikes deals with trade after Brexit before chancellor Rachel Reeves announced changes to IHT. .

The exemption was introduced in the 1980s to allow farms to remain in the same family after the death of an owner, a trend many warned would become more difficult. However, this helped raise the price of farms because wealthy individuals bought agricultural land as a form of legal tax evasion.

Farmers looking to pass on their land, and their spouses, are each eligible for £1m relief before they start paying IHT on their land, on top of the usual inheritance allowances.

Given that married couples already enjoy a threshold of £1 million on their estates that means both spouses will enjoy a threshold of around £3 million, officials noted.

A government spokesman said: “Our reform of agricultural and business property relief means that estates will pay a reduced effective rate of inheritance tax of 20%, instead of 40%, and the Payment can be spread over 10 years, without interest.

“This is a fair and balanced approach, which improves the public services we all rely on, affecting around 500 estates next year.”