According to Scottish Land & Estate (SLE), as tax reforms spark panic in the countryside, family farms and rural businesses are pulling plugs into millions of investments.
The warning follows the publication of a policy paper entitled Agricultural Property Relief and Business Property Relief Reform on July 21, and sets for changes to take effect in April 2026.
SLE, representing Scottish rural businesses, criticizes the document for showing that it has little understanding of the real-world impact of tax reform on the ground.
Eleanor Kay, senior policy advisor to the group, said: “We know that investments in agricultural infrastructure have been reduced, plans of all sorts are pending, and even machine sales have been significantly reduced since this policy was announced.
She said there was no consultation prior to the initial policy announcement, and that the government now appears to have completely dismissed concerns raised by rural stakeholders since then.
“It is surprising that there has been no proper impact assessment of how changes to law, particularly business property relief, will affect the scope of other rural businesses, not just the agricultural sector,” she added.
The SLE also raised serious concerns about the lack of formal impact assessments to support the proposed reforms.
The rural organization said without this data the government’s assumptions about the outcome of the change were unreliable and not evidence-based.
He also criticised the lack of transitional arrangements to support older farmers who have not handed over the farms to the next generation.
The SLE noted that such farmers were disproportionately affected and that there could be little choice under the proposed rules.
The organization has expressed to the alarm that the government appears to be ignoring multiple sector reports, including its own official data. This indicates that many farms already operate at very tight margins and are experiencing a decline in average revenue.
He also warned that policy papers on how these tax changes will affect domestic food security in the UK lack a fundamental awareness.
The government must prioritize high quality homemade produce to reduce its reliance on low-quality imports and reduce food miles, SLE said, but the policy appears to work against those objectives.
The agency rejected the government’s claim that the policy “is not expected to have a significant impact on family formation, family stability, or family breakdown.”
The view said it ignores widespread warnings from the agriculture industry as a result of the rise in stress, anxiety and mental health issues as a result of reform.
Furthermore, policy papers do not distinguish between the market value of a farm and its value for inheritance tax purposes. This is an issue raised earlier by the Agricultural Aquaculture Association (CAAV).
Kay said the outcomes of these reforms have been felt for decades. “These tax changes will have a major impact on rural areas over the next decades,” he said.
“For many years, we have called for mandatory rural impact assessments to ensure that policy decisions are made with appropriate consideration of impacts on rural communities, a prime example of how things don’t work without such assessments.
“There is still time for the government to make wise adjustments to this policy, so we will avoid significant damage to labor farms. We will encourage rural businesses to listen and prevent losses in millions of pounds of investment.”
Reforms to agricultural property relief and business property relief are scheduled to take place on April 6, 2026. Rural groups continue to request changes before the law is finalized.
