Chancellor resists U-turn as Treasury studies moves to soften farm tax

Rachel Reeves is holding firm against a U-turn on inheritance tax for farmers, despite the Treasury analysing ways of softening the impact.

- Rowena Mason Helena Horton Peter Walker

The chancellor is understood to be determined not to drop the policy even though some Labour MPs - and even ministers - are worrying about the political fallout of the policy that has seen farmers protesting in Westminster this week.

The Treasury has been assessing ways to mitigate the impact of changes, including amending gifting rules for over-80s so they can pass on their farm to their family without having to live for seven years after making the gift. Officials have also been looking at the impact of changes announced in the budget in October on active small- and medium-sized farms compared with smallholdings.

But one Labour MP said the messaging from the Treasury about a U-turn was "absolutely no, not happening".

In spite of the Treasury insistence, some Labour MPs still believe the policy will be softened.

A Whitehall source said they believed any full U-turn on the policy would have happened already before the farmers' protest, but that any future mitigation would be more likely at a fiscal event or spending review "when some of the heat has gone out of the issue".