Farmers are shrinking their own businesses, CLA survey finds

One respondent put it plainly. “I am doing everything I can to devalue my business to reduce the tax burden for my children.”

That line comes from a new poll of 700 rural family businesses by the Country Land and Business Association (CLA). According to the survey, nearly 90% have paused investment, and some say they are actively devaluing their businesses to avoid triggering inheritance tax bills they can’t afford.

Holiday homes, machinery and reservoirs put on hold

Respondents describe cancelling plans to create holiday homes, putting off buying new machinery, and stopping growing crops. Some have delayed building reservoirs needed to cope with drought. Others say they are allowing buildings and land to deteriorate.

In total, 89% say they have paused investment. Of those who have cancelled investment, more than a third have shelved projects worth over £150,000, held back for fear of surpassing the threshold. And 64% have abandoned plans worth over £50,000.

Is the £2.5 million allowance enough?

The government says the updated £2.5 million relief allowance means most family businesses will not be affected.

But nearly 85% of those polled said the allowance is not enough to cover the value of their business, pointing to the rising cost of machinery, livestock and crops.

The CLA says family-run businesses, which tend to be asset-rich but cash-poor, would be forced into a cycle of asset sales or debt to cover the tax. It warns this would undermine the long-term viability of the rural economy, jobs and communities.

Nearly half of respondents say they would have to sell at least a quarter of their land to pay the bill. One in four say they would have to sell more than half.

Worries about the next ten years

The findings come after a string of poor harvests, with the average farm earning just £29,800 in 2025, according to the CLA.

Seven in ten respondents say they are worried their family business will not survive the next ten years. And 29% say they are seriously considering leaving the farming industry in the next five years.

What the CLA wants from the budget

With the budget approaching, the CLA is calling on Andy Burnham and Chancellor John Healey to scrap the inheritance tax reforms. The organisation claims the current policy is forcing family businesses to shrink simply to survive, and is undermining growth and job opportunities across rural Britain.

CLA President Gavin Lane said: “We’ve warned for years that the logic behind this tax is perverse and self-defeating. Now the data proves why.

“Families who’ve spent decades building up their businesses are being forced to shrink them down again just to keep hold of them. They are scaling back ambitions, letting buildings deteriorate, and stripping out value, all to pass on businesses that may no longer be profitable.

“Burnham says he wants growth in every postcode. But this will be impossible until he reverses the tax actively destroying it. Family businesses want a leader who can help them invest and expand and drive forward the economy.

“At the next budget, Burnham has a chance to prove he’s more serious on growth than his predecessors. He must reverse the tax, deliver a proper rural reset, and get the countryside moving again.”

The CLA represents farmers, landowners and rural business owners across England and Wales.

📷CLA President Gavin Lane