Multi Millionaires Complaining Again

[ARealitycheck]

I see our multi-millionaire landowners had another moan today at a labour party conference. Oh the woes of having to pay half the tax over a period 8 years longer than the rest of the public.

https://www.bbc.co.uk/news/articles/c2ljdvqegkeo

Not a good look when the spokesperson is the owner of a farm obviously worth £5m who has been in receipt of circa £90k subsidy money annually in recent years. While standing in front of machinery that is built anywhere but the UK.

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!

YABVU op.

Think through carefully what you're saying.

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 ;)

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.

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.

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.

Private Eye article

@jasflowers
Yes I agree. When I looked on the councils development plan, there were lots of statements from Land Agents saying why this or that piece of land should be used for development. All farmland.
This was last year so well before this policy.
There are also whole fields of flowers being grown presumably as part of government stewardship scheme. I don't think you can eat flowers but the sub pays more than food.
Farmers are business people. They will do whatever makes them the most money including renting out fields for solar farms.

No poor farmers where we are in central Scotland - well, not going by the big houses and cars......

Also, farmers can make a lot of money in the good years but we can also lose a lot of money in the bad years. I had a whopper of a year the Russia invaded Ukraine. I’m about to have a dinger of a year this year. Farmers have had a fairly good run of it for the last decade or so but the thing is, lots of them have been farmers for 40+ years and remember a decade with a fairly bad run of it. When looking at a business you can’t look at their profits for one year and think that’s normal. Also all reinvestment has to
coke from profits. Tractors and telehandlers don’t come cheap. Neither does housing a fair number of employees

According to this report, the new government accelerated the drop in subsidies and froze a grant scheme;

Nov 2024
Grants promised to farmers in England for planting hedges and cleaning up waterways have been frozen by the government...

The news comes after Rachel Reeves’s cuts to farming subsidies were larger than expected ...

the chancellor announced a cut of 79% to these payments. Farmers were expecting a more tapered cut: the AIC data shows that, at the top end of the scale, a farmer receiving £62,000 last year was expecting £38,000 this year but would now be getting £7,200.

https://www.theguardian.com/environment/2024/nov/26/environmental-grants-promised-to-farmers-in-england-frozen

Except the tenant farms are often parts of much bigger farm estates and will be the bits that will be sold off to pay the taxes of the owner farmer before they have to break up the land they farm themselves. And those farms will go to rich people who don't farm or companies that want to build houses on the property. Many tenant farmers are very concerned about security of their future.

My point still stands however; cows have to be replaced (every 3 or 4 years, so 30 or 40 a year), milking equipment has to be replaced, and the return is a function of how much capital is tied up in the ‘production’ of the profit. So what level of return is acceptable to you on the capital tied up in a farm?

It’s an asset rich cash poor sector on the whole. The number of poor and average years significantly outweigh the good ones. The long term return is poor. It also tends to have a horrendous working capital cycle. It’s been propped up by land values on which banks are willing to extend facilities…If the changes in IHT result in lower land values (maybe good in the long term) there will be a number of farming businesses that will suffer a huge ‘credit crunch’ in the short term, even though they don’t need to sell land themselves, as banks reduce facilities, accelerating the concentration of land in the hands of a smaller and smaller number of increasingly wealthy people.

Be careful what you wish for has never been more apt. I’d like to think that the government carried out this analysis as part of the formulation of policy, but as has become apparent they’ve been making policy up on the hoof, so…

The government have also done this
https://www.farmersguardian.com/news/4409927/mental-health-fund-scrapped-leaves-farmers-rock

And suggested they might change the gun laws to make you keep your gun at a different location to where you live (I.e the place you need it, on the farm!)

So over a couple of generations the farm is eroded to a size that's it's unviable?

Well said 👏

For some farmers this will indeed be a very costly and serious business and they will not have had time to mitigate the losses. The finances of farming are such that families do have land assets but turn very small profits on the basis of these assets. Forcing them to sell will concentrate power in the hands of a smaller number of players and will reduce the number of artisan producers which in turn will reduce choice. There is much glee in the postings of the OP which does not reflect well.

Generational farm owners being well off? A minority, maybe. The majority - bollocks.

Are you saying £100k pre tax? Doesn't sound like a lot when you have people on here saying they earn £200k working from home. And don't have to be milking early morning and evening every day of the year.

And 100k presumably isn’t just pre-tax, but buying the cattle, feed, vets bills, labour costs, farm insurance, farm equipment etc - long before actually paying themselves a salary. It’s really not a lot at all.

But we've all been shitting on farmers for years. All this righteous ire about the tax, whilst I agree is wrong, is just the final tip of the scales.

For all the comments I see on here, I wonder how many people kicking the government over this have happily accepted the pennies the supermarkets pay farmers for their produce so that we, the consumer, can pay less.

The industry has been in decline for decades. It has competition from cheaper imports, successive subsidy cuts and supermarkets paying less and less.

Whilst Labour might have delivered this particular nail in the coffin, I wonder how many realise how many subsidies the Conservatives have slashed over the years and replaced with 'stewardship' schemes that require farmers to jump through environmental hoops.

Many of our truly breadline farmers aren't out on the protest marches because they don't own the land they farm on, and have been much harder hit by the loss of direct subsidies pertaining to the practice of farming as opposed to the land it sits on.

Frankly, we needed to be giving this much of a shit much sooner than this.

Fuck me, this is an ignorant post. Presumably it's some sort of joke or click-bait to annoy people? Too tired to play, sorry.

Ask yourself how that farm become worth £5m. In the majority of cases it is due to not showing profit by either purchasing further land or replacing machinery rather than maintain older ones.

As a previous poster pointed out, a great many tenant farmers or indeed farm employees wanting to become farmers in their own right stand no chance. Simply due to land prices being priced at way beyond their productive value, all down to tax breaks and subsidy farming.

@WhitegreeNcandle
With your comment about farms having the expense of housing employees. You do to a certain extent support my post that farmers and their employees are considerably better off than their pay packet may suggest. I can think of no other industries give their workers and their families a home, often for life.
As I said before. How would the rest of the population get on if at the end of the working week, all their housing and associated costs were paid for before they opened their pay packet.

To all claiming no farmers no food, The land doesn't disappear just belong it belongs somebody else instead of Farmer Giles who's family had it since 1899. Perhaps even, new blood and new thinking could make the land more productive.

Except those tenant farmers will be long gone as the estate will have been decimated by a huge IHT liability.

If the farming community, especially dairy farming were honest. Cattle to produce milk is extremely poor use of land. The land mass required to feed these animals during grazing and they winter feed is immense. Production of crop would be far more productive, just less financially beneficial to dairy farmers.