Why are a tiny number of rich farmers dominating the news cycle?

[InvisibleRadiator]

I've been reading around this inheritance tax issue, and the more I read the more I agree with government policy!

For starters the government thinks this will only affect the 500 richest farms and some think this could be as low as 100 farms!
x.com/DanNeidle/status/1852064433738256394

How on earth have such a rich elite managed to whip everyone up into such a frenzy, making it sound like poor old farmer Giles's kids are going to have to sell the family farm when he dies.
The following article explains how when taking into account the IHT property exemption, a married farming couple would not pay IHT unless their assets exceeded £3 million!
www.independent.co.uk/news/business/inheritance-tax-farmers-protest-maths-b2649181.html

And there are so many concessions such as having 10 years to pay, and being half the rate most others pay! And there are many ways to legally reduce the impact of the tax.

It's clear that wealthy investors have been pushing up land prices, and apparently farmers are involved in less than half the land sales now, when compared to 15 years ago.

And now this tiny band of super rich are trying to plead poverty? I don't believe a word of it.

This final article puts it far more eloquently than I ever could.
www.theguardian.com/commentisfree/2024/nov/17/farmers-have-hoarded-land-for-too-long-inheritance-tax-will-bring-new-life-to-rural-britain

Good on Labour for standing up for the average person and trying to claw back a tiny portion of generations of inherited wealth for our public services!

This inevitably will have a chain reaction and in future years people will look back to the root cause of it all and it will be this point.

We do not produce enough food in this country as it is and import too much from abroad.

Anything that makes it harder for farms to produce food and livestock and turn over a basic living is madness. Of course they are asset rich and cash poor. To suddenly produce additional tens of thousands of pounds a year for ten years to pay inheritance tax will wipe out the profit or so many leaving them no choice other than to sell and break up the farm.

Then we will have the large conglomerates come in or the land will be reclassified for housing. There are no winners here.

More food to then be imported from abroad.

But I don't think the likes of JC is a wise move in spearheading this demo.
He makes his money from other areas and is significantly wealthy outside his latest venture. He really is not at all representative of farmers, though he is perhaps representative of the issue of wealthy people taking on the mantle of "farming" without having the history and association with it all.

That’s probably the farmer who have less than 3 million pounds in assets.

There are interesting figures in the Guardian from the Inland Revenue and not that many farms were valued above 3 million.

Also they don’t have to pay mortgages as they live in the farm house. Many families have to pay huge mortgages and live on 40.000 per annum. Plus if that’s their profit have they already deducted some wage and pension. Profits don’t really show the entire picture.

eg cars deductible as used for the farm
party at Xmas deductible as a business expense
food off the farm
various expenses eg groceries lost as deductibles
pension for farmer - business expense
wages of family ( kept below high rate tax) expense of the business

outcome - only say £40,000 profit

I don't think that the odd farm being sold will reduce food production. Another farmer will buy it. It's false that it all goes to housing.

I wouldn't have a problem with a second look to be absolutely sure that the policy is fair to the smallest or struggling of the independent farmers but the rest can just put their hands in the pockets like everyone else has to. Some of the loudest noise is being created by the ultra right, anyway, and we all know where their interests lie (whilst they're sending their own millions to tax havens like Panama).

Another farmer will buy it? Tee hee hee

You think that farms don't have mortgages because they live in the farmhouse?

Loads of farms have borrowing on the land sometimes it's mortgages sometimes othe loans. Rural finance is a lucrative business.

Of course land changing ownership will reduce food production. Some of it will be bought by people protecting their views. New leases take time to draw up. Some of it there will be no other farms in the vicinity who want it/can afford it.
There's lots of reasons land will be out of circulation permanently or termporarily.

A number of private investors purchase ag land so it gets tied up in other purposes too. It's not just farmers who buy land

Sorry I quoted the wrong poster

I'm finding it very hard to have sympathy with the poor farmers in their brand new 4x4s living mortgage free and sending their kids to private school. Yes they work hard, yes they produce food, but no they are not all poor.

The fact of the matter is tax has to come from somewhere - the services like the nhs, schools etc need more money. Where do you want it to come from? It makes sense to look at those with huge assets?

It's not just 100 farms. It's 100 farms per year based on how many farmers die in that year, using one year as an example.

And most farmers are asset rich on paper, but cash poor in reality. Those combine harvesters that the farmers need to do their work are over £100k on their own. Farmers are not rolling around in spare cash.

There is, however, a few factors that often haven't made the headlines in that the £1m "limit" is on top of the regular IHT brackets, so a couple that own a farm that includes the farmhouse will also be eligible for the uplifted £500k bracket for each of them, so that's another £1m on top.

Here's a farm in Peterborough that's currently for sale - https://www.uklandandfarms.co.uk/rural-property-for-sale/east-anglia/cambridgeshire/36245_lir240108/ - £9,000,000.

Imagine that farm is owned by a family that has been passed on from generation to generation. Current farmer dies. The first £1m of the farm's value is exempt from IHT on the "normal" rules, so £8m is then subject to the new rules. The next £1m is exempt, leaving £7,000,000 with a 50% relief, leaving £3,500,000 taxable at 40% = £1,400,000. (I've probably gone wrong somewhere, but let's say this is a ballpark figure)

For a farm that makes enough for the farmers to live on each year, no-one will have a spare £1.4m knocking around to pay it.

So, assuming the farm is worth £9m, around 15% of the farm will need to be sold to pay the IHT.

Selling a farm takes absolutely ages (someone I know sold part of their farm and it took about 3 years to find a buyer) but the IHT needs to be paid within 6 months of death, so not sure where that's going to come from.

Meanwhile, the useable land is now 15% smaller, so less crops are being generated and consequently the new farmer's income is reduced, or, to make ends meet, more likely, prices will go up.

If, as the articles are saying, there are so "few" farms affected, how much does the government expect to raise using the new IHT rules? £2bn. That's not just 100 farms.

Tax adviser here. There are so many complications to this legislation, both current and proposed inc clawback of allowances, interaction with business relief etc. that many money farmers will be in trouble than the government says.

Also owners of family companies worth more than £1 mill are going to be in even more trouble.

its a great headline grabber but in reality it’s either a poorly thought out scheme or os part of a more sinister long term plan.

It does seem like the farmers have done a good job of raising awareness compared to all the other family business that will be impact by the change in treatment on the passing on shares.

The farmers do have a national union through which the farmers concerns can be expressed, There isn’t really an equivalent for shareholders in family companies unfortunately, otherwise I suspect we would be hearing more from them. It’s an absolutely disgraceful policy. Labour don’t care about growth in the country with their Budget for stagnation. Why anyone voted for these incompetent clowns I will never know.

Because they were told that the tax for "working people" wouldn't increase.

I imagine all these farmers and business owners would describe themselves as working people...

Rich farmers! 🤣🤣🤣🤣🤣 Wipes eyes. I live on the Cornwall/Devon border and know several farmers. Rich!? Farmers don't exist in isolation, this will badly affect a lot of other rural businesses which service farming.

Rachel from Complaints cannot even get her story straight on this policy.

Either most farms can find ways to not pay the tax, in which case it won't yield any significant revenue.

Or, it will raise billions to 'save our NHS' in which case farmers will be badly hit.

Which is it? Both cannot be true. Incidentally, I don't think other family businesses should have to pay this either, not just farmers.

The private equity firms, the speculators who Reeves has agreed she won't tax, now they are rich! They are probably more likely to pay for new clothes though.

If this has been written the other way then the Labour supporters would be all over it accusing the op of being a "Tory bot".

I don't know where these farmers everyone knows who drove posh cars and send the children to private schools are
I've lived in two farming areas, know very well another, and old landrovers and the children walking to save their bus fare to the nearest comp is the reality for all.
I remember the farming lads falling asleep in lessons because he'd been up most of the night helping lambing or similar, or dashing home at the end of he school because they'd heard there was a cow loose and holidays were spent working round the farm. I remember going on a school trip and one of hem commenting that they hadn't been more than 2 miles from the farm since the last one

And yes, these are farms that will be hit by this.

The "reality" that the government is trying to show is not the reality for farming communities.

Yes but people inheriting a house for etc are unlikely to be relying on that property to earn their livelihood and so it's more common to sell the property inherited (a family home for example). Selling a farm because you can't afford the inheritance tax has obvious implications for the livelihood of the family due to take over and continue farming. It is a very different situation.

Has MN become the Labour propaganda site of choice? So many threads indicating this.

I am quite surprised at how many people on this thread seem to think inheriting a family farm is the same as inheriting a family home. It baffles me. I think most people don't get it to be really frank.

Yeah, but people should know by now Labours definition of “working people” was never going to include people who actually work. Anyone, who thinks that overall minimum wage earners are going to be better off overall have another think coming too. Labour are about ideology- nothing else matters (except their own comforts, bank balances and apparently wardrobes)

Four legs good, two legs even better. These are Orwellian times.

Its leaning so far left it’s close to putting itself, unconscious, into the recovery position.

I agree with you and I support you 100%.

Yet another rich farmers post. You do know that in real life this just isn’t true?

Many of us live within farming communities and can see this with our own eyes.

I don’t know one farmer round here who drives a new 4x4, most have pick ups that I suppose were new once upon a time, but it’s a far cry from the Barbour wearing, private school attending, new Range Rover driving that we keep being told about!

Obviously there may be some farmers like this, but they’re in the minority, just like Richard Branson is a business owner but doesn’t represent every business owner in the world.

I know 2 farming families whose dc go to private school, but that’s only because their wives own thriving separate businesses which bring in a better lifestyle than farming alone can.

This is a very good point actually.

Farmers do, despite the potential ramifications, have the ability to sell off part of their land to raise the case and pay the tax due.

Someone that inherits the family business that they currently work in do not have the same option. They could, potentially, sell some of their shares to raise some cash, but very few people would want to buy into a normal trading family business .

Complete urbanite here, with no skin in the game, living as I do in inner SW London.

But It's a monumentally stupid, financially illiterate idea. Well, I say that, but it's absolutely fantastic as a divide and conquer strategy where the government gets lots of people happy at the thought that those they view as wealthy will be made to pay up. That's working brilliantly for them, we've seen it on this thread - 'if we have to pay, why shouldn't they?'. And if it was as straightforward as that, they'd have a point, distasteful as stoking that kind of resentment is.

But as has been stated multiple times on this thread and others, the reality of farms is that there is not the spare cash to take out of the business to pay. Forced sales will result in huge conglomerates taking over farms, they will push up food prices and squeeze us all even further. I don't know about you, but I don't have a lot of spare cash to be happy about yet more food price rises.

Labour have a track record of being suspicious of small business and starry-eyed about large corporates, and a history of naivety about the intentions of larger companies. Remember how Gordon Brown swallowed the lies of Kraft and its CEO about its intentions for Cadbury's?

I had hoped that Starmer would have been wise to the reputation Labour has of not giving a shit or understanding anything about the country and would consequently have the nous to swerve this kind of silliness, but sadly he proved me wrong.

Even from a financial point of view, it's just completely idiotic. How much is our food security worth as a nation, and is it really as little as this tax will raise?

Try harder and think smarter, Mr Starmer.

What, all farmers are wealthy??

How do you know this? And do you understand that much of the 'wealth' is notional and/or tied up in land that can't be sold without losing the entire business?