Abolishing tax relief could “destroy” Welsh family businesses.

Any decision to scrap inheritance tax relief for farmers could lead to the “breakup” of Welsh family farms, a union has warned.

The BBC has learned that the British government plans to increase the amount raised by the tax in its budget later this month.

Land used for agriculture is currently exempt from inheritance tax.

The Treasury said it would not comment on “speculation.”

Inheritance tax is levied on the property, possessions and money of a person who dies above the £325,000 threshold. It brings in around £7 billion a year for the government.

The tax includes a number of exemptions that successive governments have changed over the years to raise more money.

Changes to some of these are understood to be under consideration as ministers at Westminster seek to close what they say is a £40bn deficit in the public finances.

However, it is unknown what changes will be made in the budget on October 30.

Thanks to the agricultural relief, areas or pastures that are used to grow crops or keep animals are exempt from inheritance tax.

NFU Cymru has warned against scrapping inheritance tax relief for farmers.

“We are very concerned about this,” said the union’s political adviser, Huw Thomas.

He said, “There’s no way they’re going to do that.” [farmers] be able to meet this type of tax demand.

“They may have to sell their products to pay off this tax debt. This will lead to the dissolution of family businesses and will then have a very negative impact on rural Wales,” he added.

NFU Cymru has written to the Chancellor and Welsh MPs saying that Agricultural Property Relief (APR) is “essential to maintain the confidence of family farms, to ensure that leasehold farming continues to be available and to sustain small family farms that can Forming the foundation of Welsh agriculture “viable”.

The union also pointed out that new Secretary of State for Environment, Food and Rural Affairs Steve Reeds, when he was shadow environment secretary, said Labor had “no intention” of changing the APR.

A Treasury spokesman said it does not comment on “speculation about tax changes outside of financial events.”

A spokeswoman for Plaid Cymru said its “removal would risk the extinction of a generation of family businesses and jeopardize the long-term future of the sector by making it less attractive for young people to enter the industry.”

Welsh Conservative shadow minister for rural affairs James Evans MS said removing the relief would be “a devastating blow to Welsh farming families”.