Allowing farmers to pass estates on without paying inheritance tax was no longer “affordable”, Rachel Reeves has insisted in defence of her controversial Budget policy.

       The Chancellor is facing anger from farming bodies after ending the long-standing allowance for agricultural land to be passed down generations without paying inheritance tax.

       During a BBC interview, Ms Reeves was confronted with a video message from a fifth generation farmer in Yorkshire who said her family now faces a ￡1 million tax bill.

       The Chancellor showed no indication that she would consider reversing her inheritance tax rise, instead arguing the old system was too costly because of strains on public finances.

       Ms Reeves said: “Last year, the benefits of agricultural property relief, 40 per cent of the benefit was felt by 7 per cent of the wealthiest landowners. I don’t think that it is affordable to carry on with a relief like that when our public services are under so much pressure.

       “And of course farmers as well rely on good public services, whether that’s our NHS, our roads or our schools. That money will be put back into improving our public services and putting our public finances on a firm footing.”

       The argument that allowing farmers to pass on their estates without paying inheritance tax is no longer affordable for the state, despite vast tax rises and spending increases being announced elsewhere in the Budget last week, is likely to rankle those who will feel the impact.

       Ms Reeves gave no indication that she was considering reversing course on what the Liberal Democrats have dubbed the “tractor tax”.

       Under the current rules, farmers can hand their estates down after death without paying inheritance tax. But from April 2026 that will change, Ms Reeves announced.

       Instead only farming assets worth up to ￡1 million can be passed on tax-free, with those above this threshold facing an effective 20 per cent tax charge.

       The move was taken to close a “loophole” which allows people who are not traditional farmers to buy up agricultural land to avoid paying inheritance tax.

       But it has led to warnings that small farms who have little income but agricultural land worth above that amount will be forced to sell up to pay the new tax bills.

       Ms Reeves defended the policy by arguing that “only a very small number of agricultural properties will be affected”.

       She noted that each member of a married couple benefits from ￡1 million agricultural property relief. They can also benefit from regular inheritance tax support of up to ￡1 million.

       So, the Chancellor argued, many farming families in effect will be able to pass on estates worth up to ￡3 million without paying any inheritance tax.

       But anger continues to build from the agricultural community and its representatives.

       Jeremy Clarkson, the former Top Gear presenter who owns a farm, said in a Sunday Times piece: “I rarely write angry. But today I’m forced to make an exception because Rachel Reeves announced in her budget that farmland is no longer exempt from inheritance tax. And that could be the last straw for farmers who are already struggling to cope.”

       Both the Conservatives and the Liberal Democrats have criticised the policy change.

       The Chancellor also doubled down on the decision not to exempt social care providers or GPs from the rise in employers’ National Insurance (NI), despite dire warnings from the sector.

       The NHS, unlike private providers of healthcare, is to be given extra money to cover the impact of the tax rise. Critics have questioned what the difference is between the two given the frontline services both provide.

       Elsewhere in the interview on BBC One’s Sunday with Laura Kuenssberg, Ms Reeves insisted her Budget unveiled on Wednesday was not “ideological”, despite tax rises on the most well-off, businesses and those with wealth.

       In an interview with Sky News, Ms Reeves conceded that some companies hit by the increase in employers’ NI could pass it on through “lower wage growth”.

       But given Labour’s House of Commons majority, all elements of the Budget are expected to comfortably be voted through unless government ministers reverse their decisions.