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Tax experts have questioned Sir Keir Starmer’s claim that a “typical family” farm would receive a £3 million exemption from inheritance tax.

They argue that the government figure is “misleading” because it requires farmers to meet complex conditions that include the possible division of ownership of a farm when a spouse dies.

The prime minister repeatedly used the figure when defending the controversial decision in the Budget to impose inheritance duties on agricultural properties above £1 million, saying earlier this month that “the threshold is £ 3 million” in a “typical family case”.

“It’s not necessarily that the £3 million figure being bandied about is wrong, it’s more that it’s misleading,” said Emma Haley, legal director at law firm Boodle Hatfield. “The difficulty is that there are various traps that can limit the allowance that everyone has.”

The £3mn figure is made up of several elements: £1mn in agricultural property relief from April 2026; a £325,000 exemption for all categories of assets; and £175,000 for passing on a house to children or grandchildren.

This amounts to £1.5m which can be passed on by a spouse directly to their children. Both partners have to pass it on in total which is a £3 million exemption.

But it means that any farms owned by one person or unmarried couples or in a civil partnership will not reach the £3 million allowance.

There are other factors that also make it difficult to achieve a full £3 million allowance.

The residential exemption is reduced if the partner’s share of the farm is worth more than £2mn and is abolished at £2.35mn.

For a couple to reach the £3m allowance, the first spouse to die must leave £1m of their estate to someone other than their spouse to avoid the second spouse’s estate passing on £2m.

The result is that the ownership of farms may have to be divided to qualify for full relief.

“On the first death you have to make sure you pass the estate to someone else and they become joint owners with the spouse,” says Haley of Boodle Hatfield. “It’s getting really messy.”

Camilla Wallace, senior partner at Wedlake Bell, said the £3mn figure “may not be realistic if you drill down” and calculated that £2.65mn was a more likely figure for larger farms to claim.

The Treasury declined to comment. The government said the policy, which applies to farms worth more than £1 million, only applies to around a quarter of commercial family farms. But the National Farmers’ Union said the real figure is three quarters of farms.

While most conversations about the relief have focused on farmers, the same will apply to business owners as the Budget has changed the rules for business property relief (BPR) in a similar way. such as relief property in agriculture. Family farms usually have to use APR for their land and BPR for their livestock and machinery.

The Treasury estimates that changes to APR and BPR will raise a total of £1.8bn by 2029-30. Calculations by consultancy CBI Economics estimate that only £387mn of that figure comes from the APR.