UK Farmers

[SunQueen24]

Can someone please explain to me what today is all about?

Found out that before 1984 farmers had to pay this inheritance tax but 1984 it was abolished listened to radiio so it was done then

It’s ok for the rest of us to pay inheritance tax but not the farmers basically! They want to keep their millions .

My Uncle retired and went on to work as a grounds keeper. He moved from his farm into an estate. Always thought it must have been a huge upheaval for him. He had daughters who had no appetite to continue farming.

My 84 year old neighbour is still very much in full charge of running the farm.
I have no idea about his pension provision, but maybe check the BBC Verify linked by a PP - the average profit being less than £50K, perfectly possible there is no private pension. He also wouldn't be able to live in the house that is part of the farm for the reason stated, so would be looing for a new home too...

he could pay rent to live there
With no income, where would he get the full market rent from?

I think this is part of the issue. Farms are businesses, they are also very varied in how they are made up, some small, some large, dairy, beef, arable, organic etc some are in prime locations, some are not, some are hugely profitable others are not. Some have diversified into tourism, properties etc some haven't. So it's difficult to know whether this iht change is fair or not.

The risk here is the loss of family farms. If the farm cannot be passed down due to inability to pay the IHT, then no more farm. It's not just about the value of the house/land, but the value of what it produces.

The risk here is the loss of family farms. If the farm cannot be passed down due to inability to pay the IHT, then no more farm.

Is it as blunt as that? I had a look to see what happens in Ireland and there are a lot of different grants and supports to help with farm succession.

https://www.citizensinformation.ie/en/environment/land/farm-succession-planning/#startcontent

Assuming kids woukd be living in the house pension etc could be used

Farmers' estates will be able to claim the following reliefs from IHT:

1. 2 x standard £500,000 tax-free allowance (£325,000 for nil-rate band + £175,000 for residence nil-rate band)
2. 2 x £1mn tax-free allowance for agricultural property inheritance

Total £3m not subject to IHT.

That is reduced to £2m if it was not owned by a couple.

Taken from here: https://lordslibrary.parliament.uk/budget-2024-inheritance-tax-and-family-farms/#:~:text=In%20the%20autumn%20budget%20the,%C2%A33mn%20in%20certain%20circumstances).

Anything over that will attract IHT at a subsidised rate of 20%. Everyone else has to pay 40% but apparently farmers are special. So someone could inherit a £4m farm and only have to pay £200k IHT, and even then get to pay it over 20 years free of interest.

At £7750 an acre the £3m threshold will be enough for 387 acres of farmland.

Upthread @Scrowy is a tenant farmer who can just about make a living for a family farming 300 acres, paying rent each year. Someone who owns farmland does not have to pay rent.

This may well drive down the price of farmland, which would be a good thing. We don't need tossers like Clarkson and Dyson buying farmland simply to avoid inheritance tax.

But does anything exist in the UK?

I personally worry that smaller family farms will become a thing of the past.

So you think an 80 year old will have enough pension coming in to pay the full market rent on what will be a farm estate that is worth over the threshold, so say, £3million? How much do you think the rent is on a house within a £3million+ farm estate? I'll tell you, there's only one farm house up for rent near me atm. It's £4,450.00 pcm.
You've not really thought this through have you?

It’s very common for elderly farmers to still work, perhaps reduced hours, easier jobs, but still play a vital role in proceedings.

It tends to be an all hands on deck kind of job, so even if someone is a SAHM on a farm there will still be a few hours work to do.

A local farm to me has three generations. Dad is in his 70s, mobility not great but enough to do stock checks, calf feeding and some tractor jobs.
Son is in his 40s, he does the bulk of the farm work with a farm worker.
His sons are in their teens, have regular milking sessions, help with lambing, starting to help during silage times and learning the ropes. His wife works part time and also does the paperwork for the farm (almost a full time job in itself nowadays).

That tends to be how it works. Everyone is vital to the running of a farm, there’s no room for slackers, and very little wiggle room to arrange a weekend off, or heaven forbid a holiday.

The poster was saying the 80 year old should pay rent on a residence not an entire farm/estate.

I don't know that's why I was querying whether there are farm succession supports and showing what is available in Ireland. My in laws are farmers in UK, I know they are in London protesting, my bil has already taken over farm and fil stepped back, I won't pretend to know how it was all managed and my dh doesn't seem to have much interest even though it impacts on his own inheritance when everything goes to his brother who remained on the farm

Someone further up said they’d seen photos that were awash with Reform posters.
I wonder if there was a reform faction that snuck in (I wouldn’t put it past them), because it doesn’t reflect with what I’ve seen.
I've seen several bidros with no reform posters visible. My son has been at the protest today and sent me several photos and videos, in the thick of it. No reform posters.

I feel like some are trying to derail the issue with info like this.

So what residence would this be?

That is the price of a single residence, on the farm, the only one for rent near to me, not the whole farm, as I clearly stated.
The poster said:
Assuming kids woukd be living in the house pension etc could be used
So clearly means pay rent to live there, on the farm.

And as for pension, see my previous response...
I have no idea about his pension provision, but maybe check the BBC Verify linked by a PP - the average profit being less than £50K, perfectly possible there is no private pension

No idea - it was someone else’s post.

Well, hang on.

Most 'owned' farms have massive mortgages on them going back generations. It's often no different to paying rent it's just the landlord is the bank

How much food do you produce for the nation?

IHT was abolished to allow farmers to produce good quality food for the nation. What are you going do when the price of food rockets because we have no farmers to produce it and it all has to be imported?

You sound similar to us @Dulra, my DH is the eldest son, but doesn't farm, his younger brothers do and his Dad hasn't fully retired but has taken a significant step back.

My DH is not convinced this is an entirely bad move, but his family are very financially savvy, and tend to maximise any tax or fiscal planning opportunities that arise. There are many farmers struggling to make ends meet, but there are plenty who are doing pretty well for themselves too. My in-laws work hard, there's no two ways about it, but they have foreign holidays, drive expensive cars, go out for nice meals regularly etc etc. They could send their kids to private school if they wished to (my DH and all his brothers, and wider family, again, many of them farmers, all boarded!)

Where they are, all their neighbours/peers are similar. And that's great, good for them, but I do think that this suggestion that all farmers are impoverished is not reflected in the reality I see. It’s a hard life, and I wouldn’t want it, but that’s for a whole loads of other reasons beyond this!

So whilst I can see their frustration, I don't think it's quite as clear cut as some are making out.

People really don't think this stuff through, just get tied up in nonsense, I agree with you

They could gift most of the farm but keep some of the remaining land enough to be under the inheritance tax threshold and their income could be from this land.

If you don't know the details then its highly likely your FIL probably still owns the farm and it's the farm business partnership that has been handed over to BIL.

Two very different things that are also completely inseperable.

Most other businesses don't own high value bricks and mortar - they own the business but often not the premises it's run from.

With farming the oldest generation owns all of the land and house and all the generations share the business partnership (which doesn't include the ownership of the land).

Think of it as plumber with his own plumbing business and van and tools agrees to let his son join the business and do equal amount of plumbing work and take an equal share of the profits. They both use the same van and the tools and they do the same amount of work ans get paid the same, but the tools and the van still only belong to the original plumber and not his son.

When the original plumber dies his son inherits the tools and the van and continues with the plumbing business.

The assets belonging to the plumber (Tools and a van) are unlikely to meet the IHT threshold so the son can carry on the plumbing business even after his dad dies.

In farming they are now asking the business to sell off the tools (land) when the person who owns the assets used by the business dies