Hedge fund managers could buy up farmland if UK farmers sell up to avoid the inheritance levy, MPs were told, as the Tories brought a vote on the so-called ‘family farms tax’.

Conservative MPs used an opposition day debate on Wednesday to bring a Commons vote on Labour’s Budget measure which would see farmers pay higher rates of inheritance tax (IHT) if they pass down their farmland after their death.

Chancellor Rachel Reeves announced the planned changes to agricultural property relief (APR) and business property relief (BPR) in her first Budget, which opponents argue could see farming families face tax bills of up to millions of pounds.

Farmers would pay a rate of 20 per cent IHT on agricultural property and land worth over £1m when they previously paid none, with a £3m threshold for couples passing on farms.

Treasury figures project around 500 estates a year will pay IHT under the changes, but shadow environment secretary Victoria Atkins cast doubt on the numbers, highlighting National Farmers Union (NFU) which suggest “some three quarters” of farms could be hit.

Speaking in the debate, North Cotswolds Tory MP Sir Geoffrey Clifton-Brown asked: “What the government fails to answer is that when this land goes on the market, what kind of person will buy it? It won’t be the ones that have farmed the land all their life. 

“It will likely be foreign investors and hedge fund managers. They will not have generations of knowledge to work this land and will likely take prime arable land out of production, as they could possibly make more money from alternatives.”