Labour ‘to U-turn on family farm tax’ as Andy Burnham eyes ‘cheap’ win

Labour is set to perform a U-turn on the despised family farm tax as Andy Burnham eyes up a "cheap" win with Britons in the upcoming October Budget.

Insiders say the move would allow the Prime Minister to shake off any association with Sir Keir Starmer's time in No10.

The inheritance tax (IGT) fuelled fury with rural voters since its initial announcement in Rachel Reeves's inaugural budget, forcing farmers to pay a 20 per cent levy on assets over £1million when their children inherit the land.

Binning off the tax in its entirety would "scrape the barnacles off the Starmer boat", another told The Daily Mail.

Downing Street sources have now said axing the levy would come at the price of £300million, a relatively "cheap" expenditure compared to other taxes, they said.

Other options, such as raising the tax threshold to £5million, are being considered ahead of the Budget on October 28.

But raising the threshold to £5million would still lump family farms across Britain with staggering costs.

Additionally, they are hopeful the move would boost Mr Burnham's favour with 135 "grumpy" rural Labour MPs, whose political fates rest on "wafer-thin majorities".

"If we are going to do it, we should do it now," they said.

The Conservatives have already pledged to throw out inheritance tax if they win the next election.

Shadow Farming Secretary Victoria Atkins condemned the "vindictive" levy imposed on family businesses across the country.

She said: "Labour MPs were warned repeatedly that not only were they damaging businesses, leading to record farm closures in the last year, but also that they were taking an enormous personal toll on families."

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Urging Labour to ditch the tax, Ms Atkins said that if they fail to do scrap the protest-fuelling levy, the Tories would.

Earlier this week, the Prime Minister was ordered to "be careful about picking fights with the countryside" after a former rural minister admitted Labour's relationship with farmers has been destroyed.

Daniel Zeichner, who served in Sir Keir Starmer's Cabinet between July 2024 and September 2025, said the Treasury imposed the Family Farm Tax on British farmers and growers without considering the implications.

The policy devised by Chancellor Rachel Reeves, which came into force last April, sees agricultural properties worth over £2.5million subject to a 20 per cent inheritance tax (IHT).

But Mr Zeichner said his party were out of touch with rural communities when drafting the proposal, telling The Telegraph: “I think the problem is that there probably weren’t people close enough to the discussion who knew enough about rural areas and farming to know what the response would be.

“They looked at it from a tax point of view, rather than understanding the politics.”

He added: “I wasn’t completely opposed from a policy perspective, but I knew that the emotional effect it would have would be huge, and that’s exactly what happened.

“I think, in hindsight, if people had known that that was going to be the consequence, they probably wouldn’t have done it. Labour should be careful about picking fights with the countryside.”

A spokesman for the Treasury said: "As has always been the case, decisions on tax are a matter for the Chancellor to set out at fiscal events, rather than routinely commenting on rumour, speculation or proposals."