Farmers and MPs have warned the “fight is not finished” following Keir Starmer’s climbdown on Labour’s “cruel and immoral” inheritance tax raid.

The Government watered down Rachel Reeves’s tax grab against farmers in a surprise U-turn on Tuesday following intense backlash from rural communities.

The threshold for the amount of agricultural assets that can be passed on without paying inheritance tax (IHT) will rise from £1 million to £2.5 million.

Meanwhile the son of a farmer who took own life said the changers are the “best Christmas present”.

This is a partial victory for the Daily Express’s Save Britain’s Family Farms crusade which demanded the Chancellor U-turns on her tax raid announced at last year’s Budget.

The Conservatives, Liberal Democrats and Reform UK have said they will continue to push for the complete abolition of IHT on family farms, saying even the new threshold is not good enough and remains unfair.

Conservative Party leader Kemi Badenoch insisted the “fight is not finished” following 14 months of regular protests by farmers outside Parliament.

She said: “This is a huge U-turn by the government and a big win for the Conservative Party’s campaign against Labour’s Family Farm Tax.

“Earlier this year, I was told to drop our campaign, that there weren’t many votes in it, there weren’t many farmers, and people assumed they were wealthy enough to cope anyway. I ignored the advice and kept campaigning.

“The Family Farm Tax is cruel, immoral and will not raise any money because farmers will stop farming. It would have pushed farms to the brink, damaged our food supply, and hurt the people who work long hours to feed the country.

“Family farms aren’t big corporations. They are often small businesses passed down through generations, run by parents and children together, rooted in their local communities. If they fail, they are gone for good.

“This fight isn’t finished. Other family businesses are still affected by Labour’s tax raid, and we will keep pushing until the tax is lifted from them too. But today is an important win, and proof that standing up for what’s fair, even when the odds are against us can make a real difference.”

The Government’s latest U-turn means couples will now be able to pass on a farming estate worth £5 million to their children without incurring an IHT bill.

The about-turn comes in the wake of a growing rebellion from Labour MPs in rural constituencies, with dozens abstaining on a crunch vote earlier this month.

Markus Campbell-Savours voted against the Government and was suspended, meaning he now sits as an independent MP.

Labour MP Henry Tuffnell, a vocal critic of the original tax grab, said: “I’m really pleased that the government has listened and that we’ve got to a much better place.”

Reform UK deputy leader Richard Tice said: “This cynical climbdown – whilst better than nothing – does little to address the year of anxiety that farmers have faced in planning to protect their livelihoods… with British agriculture hanging by a thread, the government must go further and abolish this callous farms tax.”

Tim Farron MP, Liberal Democrat Environment, Food and Rural Affairs spokesman, also said the government must now scrap the unfair tax “in full”.

Meanwhile a farmer whose father killed himself the day before last October’s budget after weeks of worrying about inheritance tax changes has said the Government’s climbdown will be “the best Christmas present for a lot of farmers”.

John Charlesworth, 78, who went by his middle name Philip, was found dead by his son in a barn on their farm in Silkstone, Barnsley, on October 29 last year.

An inquest at Sheffield Coroner’s Court heard that in the months before Rachel Reeves’s Budget, he had been “growing more and more anxious about inheritance tax and the implications for the farm”.

His son Jonathan Charlesworth told the inquest he believed his father wanted to “beat” the Government’s proposals and “save the farm for future generations”.

He said that “pressure from the industry has paid off”, adding: “It is a step in the right direction – more farms will sleep better this Christmas without the threat of inheritance tax looming over them.

“There will, however, be plenty of larger family farms that will have to plan for potential inheritance tax costs and a further window for them to do this would be beneficial.

“It’s a welcome U-turn that won’t bring back the lives lost over the last year or so due to the anxiety caused, but will hopefully prevent a flood of suicides running up to the commencement in April.

“Pressure from the industry has paid off – this will be the best Christmas present for a lot of farmers.”

Father of three Ben Aveling, 40, breathed a sigh of relief yesterday because his Radmore Farm, in Litchborough, Towcester, is no longer at risk.

The farm, now on its third generation of the family, was threatened by Labour’s tax raid.

Ben said: “I think it’s a win for everyone who had campaigned against IHT on farms. It’s a shame that Labour have had to rock the boat of uncertainty, farmers taking their life and such in the first place.

“It’s oddly coincidental how it’s after a huge announcement of new welfare legislation and just before Christmas- which makes me feel like it was perhaps by design and maybe what they’d planned all along.

“But they will probably take the credit for this publicly when it was their own poor planning and poor research that led to this poor decision in the first place. Credit goes to everyone who stood up for their nation’s farmers and food security.”

Fourth generation farmer Olly Harrison previously told the Express that he could be forced to sell some of the farm when he inherits it from his 77-year-old father Thomas to pay tax bills.

Mr Harrison, who is an agricultural social media influencer, had told how “in the Treasury’s eyes” his 1,400 acre farm in Prescot, Merseyside, is worth about £10 million – meaning he is still far above the news threshold.

Speaking to the Express yesterday (TUES), he said: “It’s great that they have saved many farms from the poor policy. Still many will be trapped especially older widows with no time to plan

“But the admission of getting it wrong will hopefully lead to positive conversations to get it right.

“The last 14 months have been hell for many.”

He added: “No business should pay inheritance tax.”

Farmer Gareth Wyn Jones said: “Finally, the government is listening to the farmers and that should help. I still think the threshold should be higher, but it’s all positive and going in the right direction.”

At last year’s Budget, Ms Reeves said the Government would start imposing a 20% tax on inherited agricultural assets worth more than £1m from April 2026, ending the 100% tax relief that had been in place since the 1980s.

But in the announcement put out after MPs had left Parliament for the Christmas recess, Environment Secretary Emma Reynolds said: “We have listened closely to farmers across the country and we are making changes today to protect more ordinary family farms.”

She added: “It’s only right that larger estates contribute more, while we back the farms and trading businesses that are the backbone of Britain’s rural communities.”

Tom Bradshaw, head of the National Farmers’ Union, said the changes “takes out many family farms from the eye of a pernicious storm”.

Gavin Lane, president of the Country Land and Business Association, said: “The government deserves credit for recognising the flaws in the original policy and changing course.

“However, this announcement only limits the damage – it doesn’t eradicate it entirely.

“Many family businesses will own enough expensive machinery and land to be valued above the threshold, yet still operate on such narrow profit margins that this tax burden remains unaffordable.”

The climbdown is the latest in a series of U-turns the government has made since being elected in July 2024.

Earlier this year the government eased cuts to winter fuel payments – following campaigning by the Express – and backtracked on plans to make £5billion of cuts to the welfare bill.