Committee publication · Government Response · 12 January 2026 · HC 785
Government Response to Welsh Affairs Select Committee Farming in Wales Report
From: Welsh Affairs Committee
Inquiry: Farming in Wales in 2025: Challenges and Opportunities
Summary
This government response to the Welsh Affairs Committee's November 2025 farming report addresses seven recommendations on inheritance tax, funding, trade, and future support. The government increased agricultural property relief thresholds to £2.5m, removed ringfencing on agricultural funding, committed to SPS negotiations with the EU by 2027, and pledged closer partnership on new entrant support and Wales-specific impact assessments.
Key findings
- Inheritance tax: APR threshold raised from £1m to £2.5m per person (£5m per couple); government estimates 185 UK estates will pay more IHT in 2026-27 (down from 375 forecast), with 85% of APR-claiming estates unaffected; no Wales-specific impact assessment published.
- Funding: Agricultural funding added to devolved governments' baseline from 2025-26 in cash terms but no longer ringfenced; Welsh Government now controls allocation; future Barnett Formula applies to agriculture spending.
- Trade: UK negotiating SPS agreement with EU, targeting legislative arrangements by end of 2027; potential £5.1bn annual benefit to UK economy; removal of export health certificates could save £200 per consignment.
- Tariff Rate Quotas: No evidence Australia/New Zealand FTA agreements impacting Welsh beef/lamb production; quotas underutilised; government declines to publish action plan by May 2028, citing existing safeguards and trade data monitoring.
- Future support: Government commits to working with Welsh Government on new entrant and tenant farmer programmes; Wales Office to coordinate Wales-specific impact assessments on future farming policy decisions.
Government position
Partially accepts. Government accepts need for support on new entrants and commits to Wales-specific impact assessments going forward. On inheritance tax, it rejects calls for delay pending Wales assessment, citing the December 2025 increase in relief thresholds as responsive to farming concerns. On funding, it accepts ringfencing removal as devolved responsibility but commits to monitoring Barnett Formula application. On trade, it declines the May 2026 SPS roadmap deadline but confirms negotiations conclude by 2027. On Tariff Rate Quotas, it rejects publishing a dedicated action plan, arguing existing safeguards and trade data demonstrate no material harm to Welsh production.
Tone
ProceduralTopics
Key actors
Welsh Affairs Committee, UK Government, Department for Environment, Food and Rural Affairs (Defra), HM Treasury, Wales Office, Welsh Government, NFU Cymru, Farmers' Union of Wales
Notable line
“Around 85 per cent of estates across the UK claiming agricultural property relief, including those that also claim for business property relief, will not pay any more”
Key Quotes
“The Government announced in December 2025 that the allowance for 100 per cent rate of relief will be increased from £1 million to £2.5 million.”
“Agriculture and fisheries funding from 2024-25 has been added to the devolved governments' baseline funding from 2025-26, meaning the funding amount will be maintained in cash terms.”
“A central element of this work is the negotiation of a Sanitary and Phytosanitary (SPS) Agreement, which will make agri ‑ food trade with our largest market cheaper and easier, cutting costs and reducing administrative burdens for British producers and retailers, while helping to ease”
“There is no evidence that the Trade Agreements with Australia and New Zealand have had an impact on Welsh beef or lamb production.”
“The Wales Office supports UK Government departments to design policies that both reflect the particular needs of Wales and augment the devolved responsibilities of the Welsh Government in areas such as agriculture and the farming sector.”
Source · parliament.uk record ↗