Farming - kerfuffle

[Solomotree]

interesting how Jeremy Clarkson, one of the biggest vocal opponents of the inheritance tax on farms, literally boasted that he bought the farm to avoid paying it. It’s people like this we need to clamp down on and where people’s ire should be directed. And the vast vast majority of farms will not be affected.

www.theguardian.com/uk-news/2024/nov/01/farmers-shocked-budget-inheritance-tax-estates

Tax his land, Tax his bed,

Tax the table, At which he's fed.

Tax his tractor, Tax his mule,

Teach him taxes are the rule.

Tax his work, Tax his pay,

He works for peanuts anyway!

Tax his cow, Tax his goat, Tax his pants, Tax his coat.

Tax his ties, Tax his shirt, Tax his work, Tax his dirt.

Tax his tobacco, Tax his drink, Tax him if he Tries to think.

Tax his cigars, Tax his beers, If he cries Tax his tears.

Tax his car, Tax his gas, Find any way To tax his ass!

Tax him all he has, then let him know

That you won't be done Till he has no dough.

When he screams and when he hollers;

Then tax him more, take all his dollars

Then tax his coffin, Tax his grave,

Tax the sod in Which he's laid...

Put these words Upon his tomb:

‘Taxes drove me to my doom...'

When he's gone, Do not relax,

It's time to apply Inheritance Tax.

Author Unknown

America's biggest farmer Bill Gates at Downing Street 17 October 2024.

. Visiting one of his biggest fans ?

I'm saying that we should recognise that the way farms work is uniquely different to other assets:
1.Requiring multiple generations working on it for low pay
2.home, job and way of life being so tightly tied
3.the exceptionally high capital investment needed to make a small profit (unlike other family businesses)
4.the high amount of practical knowledge needed, which must be learnt over many years

And also how critical it is to the UK.

But having unusually high CGT just for farms would be unfair. We shouldn't and can't treat people as slaves who can never leave farming. Nor is it fair for the state to appropriate their family's assets. The farm belongs to their family: bought fairly and built up over generations. It doesn't belong to the state: even when the family come to sell it.

You either need another way to stop the loophole... or else just accept that you can't close the loophole without unacceptable side effects, as previous Chancellors have done.

The reduction in APR will absolutely hit the big investors buying farms and land to avoid paying tax. But let’s be honest they had the money to buy them in the first place. Most of them in recent years when prices have been high.
A lot of generational family farms will be hit also but we are asset rich and cash poor. Our farms were not bought recently. They were bought decades and hundreds of years ago when farming actually meant something and produce made you a living.
Comparing inheriting a farm between generations of the same family is not the same as you leaving you family home to your daughter. Yes, you have worked hard to pay your mortgage (if you have one) but you have been paid appropriately from your work. A lot of farmers take less than minimum wage for the hours they put in because it’s what the farm can afford. Robbing Peter to pay Paul. Your income is not generated from your home. Neither will your daughters. Unless you die young your daughter will have worked for years to earn her money at at least minimum wage. Multi generational farming is not like that. It’s communal so and the success of the farm depends on everyone. We don’t have our own wealth as it’s all tied up in the farm. I feel most for my parents generation who are in their late 50’s, 60’s and early 70’s. It’s not impossible for the earlier ages to still have parents alive who own the farm and they work there for little money and it’s all they know how to do. My generation can retrain but what will they do.

Well, they would say that now wouldn't they?

At the time, Brexit was hailed by the farming community, as a "new dawn" i'm surrounded by farms/farmers but now its very hard to find anyone who admits to voting for Brexit.... it was all someone else....

How did Farming survive pre 1992? the farm i worked on in the 80s was passed on to the children in the late 80s, no IHT exemptions.... how did they manage that?

Farmers do moan, they moan about everything, they moaned about the Agri wages board, disbanded but still they moaned about farm wages, NMW? moan about that too.
Moan about not being able to spray pesticides into rivers, or having to stop slurry going the same way or kick off about not being able to spray bees.... but now they can.... still grow shit loads of maize that allow huge amounts of soil erosion....
& the farmers i see have 24 plate Hilux's new & v large John Deere Tractors, that wreck the local hedges as they and the machinary they hitch up too are too wide...

Of course there will be farms and farming, any land sold isn't going to disappear into an underground vault, thats even if there is land sales.

However, i suspect they'll moan so much that they'll get the allowances increased.

Just to add if farmers that have to sell up because they can’t afford to pay the tax retrain who will grow the food to feed your children and their children. Farms will not be bought by farmers to farm. They will be bought by big corporations with no intention of farming or a clue how to. Farming isn’t something you learn from reading a book or Google. It’s a lived learning experience that starts from an early age. Surely
the most sense is to let those who have the knowledge do the job they know how to do. All too often people tell farmers how to do their job. Think about milk for your morning coffee, the cereals in your bread, the fruit in your children’s lunchboxes, the vegetables, the meats, the grains, the oats, the barley.
We’re looking at a future of imported food of inferior quality and a high price tag.

Well said @FarmersWife2019 you have summed up the issue very eloquently and hopefully educated those who aren't seeing/understanding the massive implications and problems of this policy.

How did Farming survive pre 1992? the farm i worked on in the 80s was passed on to the children in the late 80s, no IHT exemptions.... how did they manage that?

The same way a family on one average income could afford a decent 3 bed house in the 80s. Land and property prices and society were very different. Farms were more profitable, land was cheaper to buy and sell and food produced by farmers was sold at a fair price.

And for some estates it did have a huge impact from which they never recovered which is why APR was brought in and has remained in place until now.

What type of farm work were you doing back in the 80s out of interest @Alexandra2001 . 2001 is a very significant date for farmers.

@Scrowy will you please stop putting massive gaps in your text.

I can't see that there are massive gaps in my text. It's not something I was aware was happening sorry!

I can't see them either. Possibly device specific?

I think it's an app bug - there aren't any gaps on the mobile site, but the app is is really buggy on this thread in particular for some reason

Exactly. We can't even hold weddings in my family for a lot of the year, as people won't be able to make it due to lambing/haymaking/milking etc. Just the one day. People have no idea.

I read a BBC report that said in some parts of Dorset land is changing hands at up to £10k per acre as investors try to buy up land to avoid IHT. You can be damn certain that land was not worth that amount pre-1992.

Hopefully the UK farmers’ strike will go ahead and will help to highlight some of the key issues to the wider public. We’ll certainly be joining any protest action to try to get the terms changed.

I’ve been saying for years that we need a proper PR campaign to communicate the issues around farming in the UK. As it stands, Jeremy Clarkson saw an opportunity to fill the void and imo has done more harm than good.

FWIW, I do think that there needs to be change but as it stands, the caps we have heard about to date are too low and will hit those of us who are just about managing atm. UK family farm businesses are almost always asset rich and cash poor. The value will never be realised unless the business is closed down and the assets sold, which presumably would be subject to CG Tax anyway.

Multi-generational family farms (in our case aged 90/59/16) will surely be hit the hardest. We don’t have the cash to pay these new IHT bills when my 90 yr old FIL passes. What do we sell? We’re not the privately educated farming families referenced upthread and earn less than minimum wage when all hours are taken into account. All three farm properties are occupied by working partners in the business and all properties are tied to agricultural tenancies.

So many people want to be surrounded by farmland and enjoy food safety and relatively high standards of animal welfare but either aren’t aware, or don’t care about, the political and social contract that exist(ed) to facilitate it.

By all means introduce measures to stop celebrities and the mega rich from buying up farmland. Targeting small family businesses that feed the nation, facilitate miles and miles of public footpaths and act as custodians of the countryside seems like a cheap shot to me.

Sadly there will be a wave of suicides within the next 18 months if the parameters do not change.

I'm curious as to where all these farms under £1 million pounds are? I don't think that many are in England. A quick search of various locations on Rightmove and most were around the 4 million mark. Maybe in some parts of the UK but certainly not around the SE or SW of the country.

Also, 17% of farms last year failed to make any profit. Profits fluctuate wildly from year to year. One year a farm may make a loss, another year they might make 40k and another, a more healthy £70-90k. But that is profit on a business usually employing 6 or so people and with the need to reinvest profits back into machinery, stock and buildings. Work out the average salary there OP.

Farm machinery is extortionate. A milking parlour can cost £400k. A new Combine Harvester can cost £750k. Even a second hand one can cost £250k. Then there is the cost of livestock. It costs more to shear a sheep than the market cost of a fleece. If you care at all about animal welfare, you would also want to retain small family farms that care dearly for their animals, rather than large scale intensively farmed factories.

There is so little understanding and ignorance here. Not to mention arrogance. Time and time again, the OP has demonstrated that they are determined to be right, rather than actually listen or learn from any of the comments made. I am apolitical and a floating voter with no allegiance to any one party. But if there is one thing that is off-putting and damages the left, it's that group of sanctimonious (often Guardian readers i'm afraid) left wingers who seem to derive their self worth from notions of intellectual and moral superiority that they derive from reading biased opinion pieces. They are quick to label others as ignorant or xenophobic, whilst demonstrating intolerance themselves.

Not the case in Bedfordshire. We live semi-rural with a lot of farms in the district, and the local council is mad keen on building tens of thousands of houses round here and covering up the countryside with bypasses to bypass the bypasses that have been surrounded by new estates. As farmers retire or pass away, their descendants are cashing in, and who can blame them? The point I was making is that these farms are worth vastly more than the £3million post I was replying to, and with this new inheritance tax on farms, they are even more likely to do so than they were before. They will probably have to sell up now, even if they don't want to.

Of course it's no more her country than yours. But that doesn't make a poster xenophobic to use the term 'my country'. To accuse a poster of racism is just using powerful words to try and stifle debate, whilst also demonstrating intolerance yourself.

To be honest I'm more worried about the 'absolute bell-endery' by some posters on this thread 🙄

I really feel for you and would not want to see genuine generational farms like yours broken up. Does your 90 year old FIL own the entire farm? Why has he not passed a third or a half down to you? Are you not planning to give your DC a stake in the farm that they are working on? I really am on your side so don't mean to sound ignorant, but surely the older folk should be passing on at least part of the land/buildings to their farming DC much, much earlier. Would the DC not be grateful to have some ownership and autonomy?

Until this week the most tax efficient way to hand over the farm was to keep it until you died and then use APR to pass it on. That's why many haven't made plans in advance to hand it over earlier.

The ownership of the farm and buildings is quite often separate to the farm business - 2 or 3 generations may be in partnership with each other on paper with the older generation generally retaining the majority share of the partnership and decision making power in the business as well. It's rare for the generation below to ever really be in charge until their parents die. It's a cultural thing I suppose and difficult to explain.

Read any of the farming press or even the dedicated Facebook groups for people working in farming and the issues around succession planning are high on the agenda.
The stress of farming puts a lot of strain on marriages as well so often the older generations hold off passing anything down before they have to in case of divorce (there's a strong argument there though that one of the main reasons for divorce is the perceived unfair treatment from the generarion above so the risk there is often self inflicted!).

Yep, he’s a dick. Wouldn’t have thought particularly representative of most farmers, either.

Our family business was wrapped up in a trust a decade ago. We thought it done and dusted. HMRC are now demanding everything is revalued and tax paid on the increase in value. The question is who pays this tax, the pensioners who set up the trust for their children, or the children who have their own money issues might not receive it within the next decade, god willing.

HMRC can't break trusts yet. But even if farmers had done this years ago, they'd be facing a revaluation.

The government wants it now and when you're dead.

I have no problem with him either. Or with Jeremy Clarkson for that matter. It will be interesting to see if he keeps the farms though once they cease to have a tax advantage for him (and actually become a tax problem as if keeps them he will pay inheritance tax on their value. If he sells them and buys land outside the UK he probably won’t).

On what basis are HMRC demanding this? They have no right to unless you are distributing from the trust. If it’s a ten year charge they will be looking for tax on the whole value… but they can’t just look to tax an unrealised gain in a trust without the trustees having done something to trigger a disposal.