Rural Business Catastrophe: Over 6,000 Businesses in the UK Collapsed in a Year due to Labour's Tax Hike
In rural Britain, a sense of unease and frustration is growing among farmers and rural businesses. This comes as a record number of agriculture, forestry, and fishing businesses have closed over the past year, with 6,365 businesses shutting their doors, according to the Office for National Statistics. This is the highest number since records began in 2017.
The downturn in the rural sector can be traced back to the months following Chancellor Rachel Reeves's October tax raid. Critics argue that Labour's tax policies are pushing generational businesses to the brink, leading to job instability, suicides, and the burden of driving the next generation out of farming altogether.
Victoria Atkins, the Tory Shadow Environment Secretary, has been vocal in her criticism, stating that Labour's tax policies are destroying these businesses and causing widespread job insecurity. Victoria Vyvyan, of the Country Land and Business Association, echoes this sentiment, warning that rural businesses are being pushed to the edge and what's needed now is stability, clarity, and a government willing to listen.
Under Reeves's new rules, coming into force in 2026, anything above £1m in farms will be hit with a 20% inheritance tax charge. This policy is estimated to cost the Treasury over £1 billion more than it raises, according to CBI Economics. Farmers fear they'll be forced to sell off parts of their land to cover these inheritance tax bills.
Sir James Dyson has also joined the chorus of critics, calling Reeves's inheritance tax changes 'vindictive' and predicting they will cost the Treasury billions in lost revenue. Tom Bradshaw, President of the National Farmers' Union, has labelled the inheritance tax rise as another attack on the industry, creating a continuing sense that the industry isn't valued.
A Yorkshire sheep farmer has referred to Reeves's inheritance tax policy as 'daylight robbery,' while a farmer from Herefordshire has expressed frustration with the tax, paperwork, and regulations, feeling like they are being pushed out. The mood in rural Britain is angry and grim, with confidence among rural businesses at rock-bottom, and more closures are expected.
Just 3,190 new rural businesses were launched during the same period, leaving a net loss of 3,175 farms. This is a stark contrast to the number of businesses closing, and it paints a grim picture for the future of British agriculture.
In the face of spiraling fertiliser costs, climate chaos, and punishing red tape, these tax policies are seen as the final straw for many farmers. The Labour government's tax policies are being criticized for potentially ruining British family farms, and calls for stability and support are growing louder.
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