Multi Millionaires Complaining Again

Private Eye article

The land was handed down and/or bought when land wasn't 8 to 10k per acre, the cows were also bought over time.

Investments will be written off against tax, that parlour will last many years...

My sister is married to a dairy farmer, the profits in many food sectors are huge, they have to be, because they don't always last but please can people stop pretending, Farmers are in poverty.

This is what the NFU suggested this week as a compromise and it was shot down by the government.

To answer why aren’t farms run as Ltd companies there are two main reasons.

1. a company pays 20% (ish can’t remember the correct figure and it is going up.) on all its profits. In a partnership each partner (often two parents and a child) have the tax free allowance each and then 20%. As farmers often earn so little it was preferable to live off your nil rate tax band rather than pay corp tax

2. tax law has actively encouraged farmers to hand into their land. Bit harsh on those farmers in their 80’s who thought they’d done the right thing to now be left with no options. They can gift but the likelihood of living 7 years is low and no bigger will insure my dh for a reasonable sum.

fwiw I don’t disagree with the tac but it’s been brought in such a crack handed way it’s made a mockery of it. The big IHT avoiders still get a 20% discount and the family farms get hit. The only winners are accountants, lawyers and insurers. They also should have allowed anyone 75+ to gift and to be exempt from day 1. If have gone harder and done 40% tax on any farm over 6 million.

Farmers will sell land for development quicker than they'll dump some slurry into a stream, to make a quick million or so.

They don't have to sell this land, its a choice, same as polluting our rivers and streams is.

They moan, its all they do, moaned about CAP, that went, then they moan about its replacement, now they moan about IHT... but stay silent on the £4 billion they get from the tax payer... regardless of their actually profitability.

120 milking cows will cost you around £300k. and require a minimum of 50 hectares of land - another £600k. You’ll also need at least a million invested in a miking parlour and cooling equipment, and possibly much much more. £100k PBT is £75k after tax - which isn’t a great return on the best part of £2 million, is it…?

Admittedly, the cost of diaries is much less, but they don’t require a farm ;)

YABVU op.

Think through carefully what you're saying.

And where were the protests when the Tory Brexit policy of the Agricultural transition came in? Farm subsidies were reduced to nil! Surely this is where a lot of small farms will struggle with cash flow?

Reform party and billionaires are behind some of this and ironically they were responsible for Brexit!

This 💯 %

Are you talking about farmers?! I imagine those same farmers who you expect to produce you top level meat or milk or eggs etc for a pittance?

They are not earning a pittance, a farmer with 120 milkers which produce an average 7000l of milk per year, will be making over 100k p.a net profit (pre tax)
Egg prices super high as is lamb.. there is a poster on here who farms sheep, says they ve never made more.

fwiw a diary farmer near me has made over million in the last 3 years, i know this first hand.

Exactly! I’m not sure the OP understands the economics of farming, or indeed running a business.

In simple terms a moderately well run arable farm will make around £200 ~ £250 a hectare profit, before finance costs and tax. A hectare of average arable land costs around £28k. So, the average return, before tax is less than 1% (0.8%). Out of that needs to come finance costs, investments in new tech/ efficiency/ environmental improvements. But let’s pretend the farm is unmortgaged and requires no investment.

Over a 40 year generational cycle, that means a 30ish% cumulative return. Which, if subject to IHT at 40% is more than the profit that the farm will ever have made, and therefore more than the cash available to pay the tax. The Government have decided that they’ll half the IHT for farms…but that still means for 40 years work, and assuming no mortgage costs, investment or drawings / dividends to the farmer, they be looking at a 10% return over 40 years - 0.25% return a year.

The result therefore is, on death, many farms are likely to be sold

The two possible outcomes then are:
(1) An increasingly fragmented farming sector, as parts of farms get sold to pay IHT and we end up with more, smaller farms, which will be inefficient and lead to higher food prices or,
(2) Consolidation of land (when sold) in the hands of fewer and fewer ultra wealthy, and probably foreign, investors whose long term aim is control of the entire food supply chain.

Neither are great outcomes, and the second, which I think is more likely, is very bad news for us all.

The story is the same for all privately owned businesses though, as they to fall into the chancellors IHT net under the proposed changes, which will lead to the death of private SMEs, and again an increasing consolidation of assets in the hands of the ultra rich.. They just don’t have such a well organised body to vocalise it.

So, be careful where the politics of ideology and envy lead you…

This. It’s estimated that farms make a 1% return, so that’s £50,000? For all hours in all weather, on call 24/7? Been there, done that, wouldn’t do it again.
Farmers deserve so much more support and respect.

So let’s throw out the farmers to get the big businesses. Who will go and find another loophole to manipulate.
Labour does love a spite tax.

One day people will realise how important food security is on an island. Hopefully they’ll be grateful for us having maintained ours and not be regretting it as they try to secure the dregs and crumbs from other, not so stupid, countries who have valued their food producers.

You will have more to complain about when we are held to ransom having to import our food from overseas

Labour came up with this legislation because they think people want to “stick it to the rich farmers”
But don’t see that without the “rich farmers” in the long run it is going to be a financial disaster
Like the government, some people don’t see consequences and it is that short sightedness is leading us down a disastrous path

A farm worth £5 million on paper doesn’t mean the farmer has money in the bank. Yes he could possibly sell it for money but if farms aren’t profitable who is going to spend money on a worthless business.

No she’s not, deluded.

She is talking sense.

Greedy farmers do that already.Selling off pockets of land they don’t want that destroys the environment and surrounding communities.

Jesus Christ. Talk about bite the hand that feeds you. Can you bear the weight of that chip on your shoulder OP. Have some fucking sense.

WTF? This is an irrelevant post of nonsense.

We have NEVER had long term food security, and we never will.

I do think food stability and the countryside itself are not really being protected by this legislation, although I am absolutely in favour of the wealthy paying their dues.

Farmers aren't all cash poor, so presumably a lot of the issue is just the general failure to tax the rich proportionately by allowing them to rebrand their earnings as something else that affords them lower tax rates.

In terms of the IT on multi million pound farms forcing the sale of parcels of land, it seems like there are obvious solutions to this. Is there a reason we can't make the IT due upon the sale of the farm or upon the farm ceasing to be a working farm? For example, if Farmer Bloggs wants to pass his working farm on to his child who also wants to run it as a working farm, they can defer the IT. When Farmer Bloggs Jr wants to pass the farm onto his child, but that child wants to either stop using it as a working farm OR sell up and cash in, then at that point both sets of IT are due for payment. Maybe there's a reason why this can't be done.

Apologies, councillors in England used to be able to join the LG pension scheme. It appears that stopped in 2014.

www.lgpsmember.org/your-pension/councillor-pensions/

What absolute nonsense OP. Bet you walk with a limp that chip on your shoulder is so big.

@Seymour5

"And about £1 in £4 of council tax goes on local government pensions, for employees and councillors."

Which council pays its councillors let alone gives them pensions? I thought it was an unpaid role?

Agreed