Thousands of British farmers protest 'tractor tax'

An inheritance tax has drawn an angry backlash from British farmers who say the ruling Labour Party does not understand rural communities.

Thousands of farmers have protested at Britain's parliament, some driving tractors through central London, to demand the scrapping of an inheritance tax they say will destroy family farms and threaten food production.

The measure, dubbed the tractor tax by critics and announced in the new government's budget in October as it sought to raise funds, has drawn an angry backlash from farmers who say the ruling Labour Party does not understand rural communities.

The protesters on Tuesday held placards stating "no farmers, no food, no future" and "Starmer the farmer harmer", in reference to Prime Minister Keir Starmer. Police estimated about 10,000 protesters took part.

The passing of farms down through generations was tax-free, but under the policy set out by finance minister Rachel Reeves, from 2026, 20 per cent tax would be paid on the value of a farm above one million pounds ($A1.9 million).

Existing personal allowances, which a married couple can combine, takes the threshold for a farm and associated property up to three million pounds ($A5.8 million).

Farmers say that while their land and machinery has a high value, the farms themselves have low profit margins, meaning their children would have to sell land to cover the tax bill.

Jeremy Clarkson, the former Top Gear presenter who owns a farm, was among those demonstrating and said his message for government was: "Please back down".

The government has said the reforms would only target the most valuable farms while helping fund public services that farming communities rely on.

Environment Minister Steve Reed said he did not expect the majority of farmers to pay any more, adding: "There are a lot of figures flying around that I do not recognise."

The government said the tax change would affect about 500 farms a year, based on the number of inherited farms in 2021-22, with the tax rate payable in instalments over 10 years. But farmers say the numbers affected will be much higher.

The government's 500 figure does not include assets like livestock and tractors, they said. The Country Land and Business Association has estimated that 70,000 farms are worth more than one million pounds ($A1.9 million), and could be affected.

The backlash is only one part of a wider opposition to the Labour government's first budget since it won an election in July, with businesses warning Reeves' other tax-raising measures will fuel inflation.

Farmers say they are already suffering from unfair competition as cheaper imported produce does not have to meet the same environmental and welfare standards, while their incomes have also been squeezed by supermarkets and hit by climate change.