Farm Shops Face Closure Risk Amid Tax Raids

Britain's farming sector faces a potential loss of hundreds of farm shops due to a double blow from tax changes proposed by Rachel Reeves.

According to the Farm Retail Association (FRA), as many as half of the nation's 1,580 farm retailers could be forced to shut down in the coming years. These businesses, often owned by farmers, employ 25,000 people.

The FRA estimates that over 700 farm shops could close, resulting in thousands of job losses. Emma Mosey, FRA chairman and owner of Minskip Farm Shop, highlights the impact of both tax raids on farmers and retailers.

"We're facing inheritance tax changes, which will mean selling off 20% of assets每generation to pay taxes. Additionally, employing staff in stores will become more costly," Mosey says.

The British Retail Consortium estimates that the Budget has increased retailers' costs by £7bn, partly due to minimum wage hikes and increased National Insurance rates.

Critics fear that the Chancellor's decision to abolish inheritance tax reliefs for farms worth over £1m from 2026 will drive farmers out of business. Some farmers have already indicated they will divide their estates to meet tax liabilities.

Sean McCann, a financial planner at NFU Mutual, emphasizes the challenges for rural businesses, including farm shops. "The £1m cap on agricultural and business property relief will result in substantial tax bills, potentially endangering many farm shops."

He notes that farm diversification has become a common practice to enhance profitability, with farm shops being a popular avenue.

Mosey expresses concern that a decline in the farming industry could make it harder for farm shops to source local produce.

However, a Government spokesman maintains its commitment to farmers, highlighting a £5bn farming budget and a focus on enhancing the sector's profitability in the coming decades.

"Our reforms to inheritance tax reliefs ensure estates will pay an effective rate of 20%, rather than the standard 40%, with payments spread over 10 years interest-free," the spokesman says.