Farmers have warned the government it would be unfair to include farms in the mansion tax as they are working businesses, “not luxury homes”.
Rachel Reeves revealed homes worth £2m or more will be subject to an annual charge on top of council tax from 2028.
Politics latest: Starmer challenged over ‘misleading the public’ with budget tax rises
Her spokesman refused to rule out farms having to pay the mansion tax, which could prove a double hit for farmers after last year’s budget removed inheritance tax relief for farms worth more than £1m.
The Conservatives accused Labour of “waging a war on farmers”, while the Lib Dems said the government has “no understanding of farmers or farms”.
Farmers have been protesting since Ms Reeves’s inheritance tax announcement last year.
She gave them a small concession on Wednesday as she announced farmers and small business owners will be able to transfer up to £1m of any unused inheritance tax allowance to their spouse or civil partner if they die – bringing them in line with homeowners.
Politics latest: Rachel Reeves accused of misleading voters over reason for tax rises
Budget 2025: Reeves urged to ‘make the case’ for income tax freeze – as PM hits out at defenders of ‘failed’ policy
Is the government gaslighting us over tax rises?
Farmers have said this is welcome but does not address the issue completely, as they said many farms will still have to sell land off, or sell up entirely, due to inheritance tax costs.
Please use Chrome browser for a more accessible video player
Ms Reeves’s spokesman said there will be “a consultation that will look at different cases” for the mansion tax.
Asked if he could rule out farms having to pay the tax, he said: “There’s a consultation on cases to be accounted for.”
He said the Valuation Office Agency (VOA), which provides property taxation advice to the government, will be carrying out the consultation.
The VOA is also responsible for valuing properties for council tax and business rates.
Read more:
How much is the mansion tax and who will have to pay it?
The main budget announcements
Please use Chrome browser for a more accessible video player
Farmer Gavin Lane, president of the Country Land and Business Association, which represents rural property, land and business owners, told Sky News: “A farm is not a luxury home. It is a working business.
“If a tax built for high-value homes were ever stretched to cover barns, grain stores, or the land a farmer needs to run their business, it would hit people the policy was never written for.
“There are already clear rules for valuing residential property. This is about council tax on homes, and this system has always been built around residential use, not the land and buildings a farmer relies on to run a business.”
Conservative shadow chancellor Sir Mel Stride told Sky News: “Labour are waging a war on farmers.
“Having been whacked by the family farm tax last year, farmers now face a double hit with Rachel Reeves’s family home tax.
“Reeves’s farm tax has already placed heavy pressure on many family farms.
“At a time when certainty is essential, this budget has left people feeling that nothing is safe – not their home, their job, their savings, their pension or their farm.
“This was the benefits budget. Rachel Reeves has chosen to put taxes up on hardworking people to pay for more and more welfare.”
Lib Dem leader Sir Ed Davey told Sky News: “The government has once again shown it has no understanding of farmers or their farms.
“For many farmers, their home is their place of work. Some farmers who could be hit by this tax earn less than the minimum wage for doing work that is absolutely crucial to our country.”
Please use Chrome browser for a more accessible video player
Under the mansion tax, officially called the “high-value council tax surcharge”, there will be four bands.
The lowest band, for properties worth between £2m and £2.5m, will pay £2,500.
The highest band, for homes worth £5m or more, will pay £7,500.
Ms Reeves and the Office for Budget Responsibility (OBR) did not reveal the two middle bands and charges.
But she said the surcharge would be uprated annually by the Consumer Price Index (CPI) inflation.
