Three major supermarkets hit back at farm tax

Tesco, Aldi, and Lidl have backed British farmers in their dispute with the government over tax changes in the Budget.

Ashwin Prasad, Tesco’s chief commercial officer, said “the UK’s future food security is at stake” and the government should pause the introduction of inheritance tax on farms worth over £1m.

Tesco is Britain’s biggest supermarket and together with Lidl and Aldi they make up around 45% of the British grocery market so their warnings on Wednesday will add to pressure on the government.

Asda and Morrisons have already been vocal about backing farmers in the dispute and Sainsbury’s has also called for the government to listen to concerns.

The BBC has contacted the Treasury has been contacted for comment.

“We’ll be supporting the NFU’s (National Farmers Union) calls for a pause in the implementation of the policy, while a full consultation is carried out,” Mr Prasad said.

Adding: “After years of policy change, it has been harder than ever for them to plan ahead or to invest in their farms.”

This comes as the government’s budget watchdog, the Office for Budget Responsibility suggested that farmers were likely to slash investment because of the tax raid.

The OBR released new analysis that said that while its estimate that introducing the tax would raise £500m a year by 2029 was unchanged, it said the estimate was highly uncertain and that older farmers may struggle to reorganise their affairs to minimise the new costs.

It also said farmers may seek to limit their tax bills by “potentially running down the value of estates.”

Aldi also backed calls for a pause. It said: “We all need a farming sector that can confidently invest in its future and continue to produce high-quality British food.”

“That’s why we are supporting the farming community’s calls for the Government to pause the implementation of its proposed changes to inheritance tax until a further period of consultation has taken place.”

A Lidl spokesperson said the supermarket giant is “concerned that the recent changes to the Inheritance Tax (IHT) regime will impact farmer and grower confidence and hold back the investment needed to build a resilient, productive and sustainable British food system.”

The German supermarket called for a full consultation. It said: “We will be raising our concerns with the government at any opportunity we get.”

Last October, Chancellor Rachel Reeves announced that farms worth more than £1m will be liable to pay 20% inheritance tax from April 2026.

Previously, farms and agricultural businesses have been exempt from death taxes.

In December, protesters drove tractors through Westminster to protest.

At the time, NFU president Tom Bradshaw told MPs farmers were ready to work with the government, adding there were “many ways” to make the policy “less bad”.

However, Sir Keir Starmer insisted the “vast majority” of farmers would not be affected by the tax changes.