Wales’ two main farming unions have warned that a limited inheritance tax (IHT) tweak announced in the UK Autumn Budget will not prevent serious harm to family farms, despite the Chancellor Rachel Reeves agreeing to make a key allowance transferable between spouses.

In her Budget this week, the Chancellor announced a small change to inheritance tax rules for farmers. Married couples, or those widowed before April 2026, can now transfer their £1 million farm allowance to a surviving spouse if it hasn’t been used. This effectively doubles the tax-free amount that can be passed on, from £1 million to £2 million. While the tweak will help some families, farming unions warn it does not address wider inheritance tax reforms that still threaten many Welsh family farms.

Plans to impose a 20 per cent inheritance tax on farms and agricultural businesses worth more than £1 million have sparked widespread concern and protests in a sector already grappling with rising costs and tough markets.

NFU Cymru said the announcement amounted to a “limited change” to a “damaging and destructive tax”, warning it would still leave many elderly and terminally ill farmers exposed.

NFU Cymru President Aled Jones said: “I acknowledge the change announced today will help a limited number of farmers, but it does not mitigate the devastating impact of this policy for many.

“In making this change the UK Government is essentially recognising that mistakes have been made in the way in which this policy was designed. I welcome the fact that they appear to be acknowledging these errors, but the step they are taking does not go nearly far enough to reduce the damage that this policy will do to Wales’ family farms, our rural communities, Welsh language and culture.”

Mr Jones also pointed to a recent report by the House of Commons Welsh Affairs Committee, which unanimously recommended delaying the reforms until a Wales-specific impact assessment is published and scrutinised.

Healso thanked NFU Cymru members, rural businesses, the public, and supportive backbench MPs for their efforts over the past 13 months and said the union would continue working with Parliamentarians opposing the government’s policy.

The Farmers’ Union of Wales (FUW) offered a similarly cautious welcome.

FUW President Ian Rickman said making the allowance transferable was “a step in the right direction” and would “help ease the challenges of succession planning for many farming families”. He also welcomed the decision not to change lifetime gifting rules, which the union had pressed to keep.

But he said the government’s refusal to reconsider the wider reforms remained “deeply disappointing, if unsurprising.”

“It is not too late for MPs to support further changes to this unfair and poorly targeted policy,” said Mr Rickman.

“We will keep making the case in Westminster and beyond to protect the future of Welsh family farms.We would urge MPs from all parties to back any amendment to the Budget that would ensure family farms can be passed on with confidence to the next generation.”