From April, the threshold for individual inheritance tax relief will rise to 2.5 million pounds (C$4.62 million) from 1 million pounds, significantly reducing the number of farms and agricultural business owners facing higher tax bills, the government said.

“We have listened closely to farmers across the country and we are making changes today to protect more ordinary family farms,” Environment Secretary Emma Reynolds said in a statement.

“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,” she said.

Tom Bradshaw, president of the National Farmers Union, said the original proposals represented a “pernicious and cruel tax” that his organization had fought for 14 months.

“I am thankful common sense has prevailed and government has listened,” Bradshaw said. “From the start the government said it was trying to protect the family farm and the change announced today brings this much closer to reality for many.”

Tractor protests in London

The move represents the latest policy reversal by Prime Minister Keir Starmer’s government. In July, it backed down on plans to cut welfare spending, and in June it scaled back a proposal to reduce subsidies on energy bills for the elderly.

Under the revised rules, 100 per cent relief will apply up to the new 2.5 million pounds threshold, with 50 per cent relief on assets above the new level. Spouses or civil partners will be able to pass on up to 5 million pounds’ worth of farm assets between them, the statement said.

The government estimated that around 85 per cent of estates claiming agricultural property relief in the 2026/27 year, including those that also claim for business property relief, will pay no more inheritance tax as a result of the changes.

The original announcement in 2024, which ended an exemption from inheritance tax for agricultural families from next year, triggered protests in London by tractor-driving farmers that have continued regularly.

The government had said the measure was intended to raise revenue to help pay for strained public services. Farmers warned it would destroy family farms and cut food production.

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Trade between Europe and the U.S. is worth almost $3 billion a day and a pact could boost both the EU and U.S. economies by more than $100 billion a year each — an attractive prospect after the devastating impact of Europe’s debt crisis (all figures US$).

“This is a once-in-a-generation prize and we are determined to seize it,” said British Prime Minister David Cameron, flanked by U.S. President Barack Obama and the presidents of the European Commission and the European Council.

The first round of negotiations will take place in Washington in July, Obama said, speaking at the Group of Eight (G8) summit near the Northern Irish town of Enniskillen.

First considered three decades ago but knocked down by France in the 1990s, the idea of an EU-U.S. free-trade deal has gathered momentum as Brussels and Washington look to generate growth and China’s rise prompts deeper Western integration.

The U.S. and the European Commission, the executive body of the 27-country European Union, hope for a free-trade deal by the end of 2014 — a tight deadline in complex international trade talks that usually take many years.

The EU and the U.S. already account for about half the world’s economic output and nearly a third of world trade, and bringing down the final barriers to trade could unleash billions of dollars in trans-Atlantic business.

But France threatened to block the start of talks until the other 26 EU governments accepted on Friday its demand to shield movies and online entertainment from the might of Hollywood and Silicon Valley.

That kept Paris on board, but EU and U.S. officials have said excluding any sector from the talks threatens the scope of a comprehensive deal and could limit the economic gains.

Obama hinted at that in his remarks. “It is important that we get it right and that means resisting the temptation to downsize our ambitions or avoid tough issues just for the sake of getting a deal,” he said.

The London-based Centre for Economic Policy Research estimates a pact — to be known as the Transatlantic Trade and Investment Partnership — could boost the EU economy by 119 billion euros (US$159 billion) a year, and the U.S. economy by 95 billion euros.

However, a report commissioned by Germany’s non-profit Bertelsmann Foundation and published on Monday, said the U.S. may benefit more than Europe. A deal could increase GDP per capita in the U.S. by 13 per cent over the long term but by only five per cent on average for the European Union, the study found.

Businesses on both sides would like an agreement in which a car tested for safety in the U.S. would not have to be tested again in Europe, and a drug deemed safe by Brussels would not have to be approved as well by the U.S. government.

Following the collapse of global trade talks in 2008, both the U.S. and Europe have sought to strike as many free-trade agreements as possible, and Brussels alone is negotiating with more than 80 countries.

— William Schomberg and Roberta Rampton are Reuters journalists based in London and Washington respectively.

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