Sir U-Turn has struck again as Keir Starmer says many more farmers will not pay death duties after Labour increased the tax-free threshold for farms from £1 million to £2.5 million. The Times has more.

In the latest Budget about-turn, after a year-long campaign by farmers, the threshold at which agricultural properties will pay inheritance tax will be increased from £1 million to £2.5 million from April.

It will mean farmers with a spouse or civil partner will be able to pass on a farm worth up to £5 million without paying inheritance tax.

A government source said the changes would mean that 85% of farms would not be liable for the tax, up from 75% previously.

Above this threshold farmers will pay an inheritance tax rate of 20%, rather than the 40% paid by other estates. Beneficiaries will have 10 years to pay the bill before interest is incurred.

The average net value of a farm was £2.4 million in the 2023-24 tax year, according to the Department for Environment, Food and Rural Affairs.

The National Farmers’ Union (NFU) welcomed the change, which came after a campaign by farmers.

And even more families are set to be caught in the net from April 2027, when pensions are to become subject to IHT. The Office for Budget Responsibility expects the change to result in the proportion of estates paying IHT to double to 10% by 2030.

Changes to how farms and family businesses pay IHT will also push up the tax take for the Treasury, which is expected to collect more than £14 billion a year in IHT by the end of the decade.

Read More: Sir U-Turn Strikes Again: Starmer Relaxes Inheritance Tax Raid on Farmers Amid Rural Fury