A Labour MP has been suspended after voting against the government’s plan to tax inherited farmland from April next year, it is understood.
Markus Campbell-Savours, who represents the rural Cumbrian seat of Penrith and Solway, rebelled in an initial vote on the plans on Tuesday evening.
Dozens of the party’s backbenchers are said to have abstained, as MPs in rural areas expressed concerns about the proposals.
Treasury minister James Murray insisted that taxing farm estates was a fair way to raise money to fund public services.
Labour wants to start charging tax on inherited agricultural assets worth more than £1m, reversing a tax relief that has existed in its modern form since the 1980s.
Above this threshold, inherited farmland would be taxed at 20%, half the standard inheritance tax rate, in a move initially estimated to raise £520m annually by 2029.
The plans, first announced at last year’s Budget, led to protests around the UK from farmers who argue they will lead to the break-up of family farms.
But ministers avoided a legislative skirmish over the proposals last year, as they were not included in the law to rubber-stamp the 2024 Budget.
However, MPs were given an initial vote on the proposals on Tuesday evening, before a full vote on legislation to deliver this year’s Budget in the coming months.
Explaining his decision to rebel, Campbell-Savours said he had promised local voters before the election that Labour would not touch the relief, adding it would leave many farmers “devastated at the impact on their family farms”.
“When the good people of Penrith and Solway decide my time here is up, I intend to walk around my community knowing that I did all I could for them,” he added.
“I gave my word and I intend to keep it.”
Campbell-Savours has been informed that Labour is suspending him from the party whip, it is understood, meaning he will sit as an independent.
The Commons approved the move by 327 votes to 182 – but 84 Labour MPs did not take part, a higher number than for similar Budget votes.
One MP in the Labour Rural Research Group, an internal pressure group for the party’s countryside MPs, told the they believed around 30 Labour backbenchers had actively chosen to abstain.
John Whitby, the Labour MP for Derbyshire Dales, added: “I hope the government understands there is a pretty strong sense of feeling on this from their own members”.
The National Farmers Union, which opposes the changes, had urged Labour MPs to abstain to put pressure on ministers to water down the plans.
The government argues the current relief is unfair and the £1m threshold, in combination with the standard reliefs of up to £500,000 per person, means that “small family farms” will still be shielded from inheritance tax.
In a concession at last week’s Budget, ministers announced that unused parts of the £1m allowance will be transferable to spouses and civil partners, a move expected to reduce the eventual tax take by £70m a year.
Jenny Riddell-Carpenter, the Labour MP for Suffolk Coastal, said she supported the concession but urged ministers to “go further” to mitigate the effect of the changes.
Samantha Niblett, Labour MP for South Derbyshire, said her party, which did not include the plans in its manifesto ahead of last year’s general election, had “lost the trust” of farmers.
“For all the good that this Budget does – and it does a lot – many farmers in my constituency simply cannot see past the broader inheritance tax changes,” she told MPs.
“Most farmers are not wealthy land barons; they live hand to mouth on tiny and sometimes non-existent profit margins.”
Treasury minister James Murray told MPs the government’s amended plans represented a “fair way forward” on the issue.
“They represent generous relief for people, while raising money for the public finances,” he added.
The Conservatives and Lib Dems both oppose the government’s proposals, with Tory shadow environment secretary Victoria Atkins saying she commended the Labour MPs who did not vote for the measure in the Commons.