Scrapping tax relief could 'break-up' family farms - union

Any decisions to scrap inheritance tax relief for farmers could lead to the "break-up" of Welsh family farms, a union has warned.

The BBC has learned that the UK government is planning to increase the amount of money it raises through the tax at its Budget later this month.

Land used for farming is currently free of inheritance tax.

The Treasury said it would not comment on "speculation".

Inheritance tax is charged on the property, possessions, and money of somebody who has died above the £325,000 threshold. It raises about £7bn a year for the government.

The tax includes a series of exemptions which over the years several governments have considered changing in order to raise more money.

It is thought changes to a number of these are under consideration, as ministers in Westminster attempt to plug what they claim is a £40bn shortfall in public finances.

However it is not known what changes will be made in the Budget on 30 October.

Agricultural relief allows land or pasture that is used to grow crops or to rear animals to be free of inheritance tax.

NFU Cymru has warned against scrapping the relief for farmers on inheritance tax.

"We're very concerned about this," said the union's political adviser Huw Thomas.

He said that "there is no way they'll [farmers] be able to meet that sort of level of tax demand".

"They may well have to sell up to meet that tax bill, it will lead to the break-up of family farms and it will have a very negative effect then in rural Wales," he added.

NFU Cymru has written to the chancellor and Welsh MPs saying that Agricultural Property Relief (APR) was "essential in maintaining the confidence of family farms, helping to ensure that tenanted farms are still available and keeping small family businesses which are the bedrock of Welsh agriculture viable".

The union also pointed out that when he was shadow environment secretary, the new Secretary of State for Environment, Food and Rural Affairs Steve Reeds said Labour had "no intention" of changing APR.

A spokesman for the Treasury said it does not comment on "speculation around tax changes outside of fiscal events".

A Plaid Cymru spokeswoman said its "removal would risk wiping out a generation of family farms, and jeopardise the sector's long-term future by making it less attractive for young people to enter the industry."

Welsh Conservative Shadow Minister for Rural Affairs, James Evans MS said scrapping the relief would be "a devastating blow to Welsh farming families".