The measure, dubbed the "tractor tax" by critics, was introduced by the government to boost funds to pay for strained public services but farmers say it will destroy family farms and reduce food production.
Farmers lined their tractors up close to the Houses of Parliament on Wednesday, hoping to convince the government to change course or face escalating protests.
Farmers across the United Kingdom say their income has been squeezed by cheap imports from abroad. (AP PHOTO)
"It's the final nail in our agricultural coffin," farmer Gareth Wyn Jones told Sky News, standing in front of rows of stationary tractors as protesters held up signs saying "No Farmers, No Food, No Future".
Farmers say their income has been squeezed over the years by the United Kingdom's competitive supermarket sector, cheap imports from abroad and subsidy cuts following Brexit.
The passing down of farms through generations was previously tax-free but in October the government said farmers would be subject to a tax from 2026.
Protests in different parts of the country swiftly followed.
The biggest was in mid-November when 13,000 people gathered in Westminster, including the country's most high profile farmer Jeremy Clarkson, the former Top Gear presenter whose program Clarkson's Farm is one of Amazon's top UK shows.
The government has repeatedly said there will be no u-turn on the inheritance tax policy.
Environment minister Steve Reed said the government was working to help farmers via rural support schemes.
"We are focused on supporting our farmers, supporting rural economics growth and boosting Britain's food security," he said in a statement on Wednesday.
Under the new inheritance tax rules, from 2026 a 20 per cent tax will be paid on the value of a farm above 1 million pounds ($A2 million).
Existing personal allowances, which a married couple can combine, takes the threshold for a farm and associated property up to 3 million pounds.
