Do I agree with farmers?

[JudesBiggestFan]

I'm generally politically aware but on this issue of farmers' inheritance tax, I can't decide/figure out from the media coverage if it's a good or bad plan?
Jeremy Clarkson's involvement has not helped me feel any sympathy for farmers , but I may well be wrong! For all the protest and hullabaloo...is it worth doing?

And there we have it. The actual facts mean not all farmers will end up being hit by it.

The Labour Party has got this so very very wrong

Yeah this is a good question, and it’s something I’m questioning too! I think the key thing about the way this is written here talks about it being 500 farms per year, I.e. it’s not just 500 farms in total. It would be good to know what this proportion is out of the number of farmers who pass away each year still in full ownership of their farms. It is an ageing population but I imagine 500 farmers a year is a decent chunk of them!
It really doesn’t help that the Nigels and the Clarksons and wealthy landowners of the world are jumping on this, that’s for sure- sadly I think they’re the vocal and unpopular minority!

He can gift to his son if the son is so inclined. Just like any other people who plan for their estate which includes businesses.

I was simply, maybe wrongly, doing a very rough calculation based on what I have been told is normal IHT rates.
I do think the rules should be the same for everyone.

@OldJohn so did you take into account any business relief?

@crumblingschoolsno, I didn't. I admit that I might have been wrong but I stick with my feeling that farmers should not be treated differently to any other business.

@OldJohn and there was business relief of 100% if qualified. RR has changed that too

Why are farms worth so much if they generate so little income? That doesn't make sense to me. What is inflating the value of the land?

At least I don't agree with Jeremy Clarkson

But if the farmer is married it's £1 million each, plus 2 x £325,00 isn't it ?
And they can pay the 20% on the amount over that £2 mil plus over 10 years interest free .
Or is that all wrong ?

Key Arguments For and Against Reform
Arguments in Favour of Reform

Tax Fairness:

1. Critics argue that APR disproportionately benefits wealthy landowners who may not actively farm the land themselves, allowing estates to grow tax-free while ordinary taxpayers face stricter obligations.
2. Reform could close perceived loopholes and ensure wealthier individuals contribute fairly to public revenue.

Redistribution of Land Ownership:

1. Large landholdings dominate British agriculture, leaving little room for new entrants or smaller-scale farmers. A less generous IHT scheme might encourage the sale of land, redistributing ownership.

Revenue for Public Services:

1. Agricultural exemptions are costly to the Treasury. Reforming or limiting these reliefs could generate significant funds for public priorities, such as healthcare or environmental initiatives.

Alignment with Modern Farming Models:

1. Some argue that high-value assets like large estates or certain non-agricultural holdings within farms (e.g., converted buildings) are not essential for food production and could justifiably be taxed.

Arguments Against Reform

Threat to Family Farms:

1. Many family-run farms operate on tight margins. Losing tax reliefs could force heirs to sell portions of land to cover IHT, threatening the continuity of multigenerational farming operations.
2. This might lead to increased consolidation of land under corporate ownership, reducing rural diversity.

Food Security Risks:

1. UK agriculture plays a vital role in food security. Disrupting traditional farming structures could reduce domestic food production, increasing reliance on imports and exposing the UK to global market fluctuations.

Impact on Rural Economies:

1. Farming supports not only agricultural workers but also local economies through supply chains, tourism, and community businesses. Overburdening farms with taxes could destabilise these networks.

Environmental Stewardship:

1. Many farmers play key roles in maintaining the countryside and meeting biodiversity goals. Increased tax pressures might discourage such practices, leading to potential ecological degradation.

Potential Unintended Consequences:

1. Reforming APR might incentivise speculative land sales or development, resulting in the loss of arable land to housing or industrial use, undermining agricultural productivity.

Is the Plan Good or Bad?

The answer largely depends on the specifics of the proposal and your perspective on tax fairness versus protecting rural economies.

• Good Plan If: The reforms are narrowly targeted to close loopholes that allow wealthy individuals to exploit APR without penalising genuine farming operations. This could enhance tax equity while preserving agricultural productivity.

• Bad Plan If: Reforms are too sweeping or poorly implemented, risking the financial viability of family farms, undermining food security, and damaging rural communities.

Labour also says farms worth £3m could end up being exempt because married couples are able to claim £1m each tax free as well as a family home worth up to £1m. Moody added that for this to be the case, the farm would have to be jointly owned and neither person have any other personal assets. And with many farmers holding on to their businesses until death, it is likely that some are widowed and therefore this will not apply to them.

Why are farms worth so much if they generate so little income? That doesn't make sense to me

Doesn’t it make sense to take a lower income & pay less tax?

Yes that’s fair. The rest of the population harmve to pay more tax than the coming rules for farmers when they inherit from their parents

Exactly, none of us non-farmers benefit from farmers losing their farms.

Some people are comparing this to paying IHT on their dead parents house. The point is, you're likely to sell your dead parents house and pocket the cash. Farmers just want to carry on farming. We should allow those that want to carry on the family farm, to carry on.

Another point that hasn't been raised enough is that the less farming we have in the UK, the more food will be imported. Maybe take a look at the standards of food (arable and livestock) abroad. British standards of animal welfare are some of the highest in the world. Do we want to lose our country's food security? Do we want cheap imported meat and chemical ridden veg and wheat products instead?

What better way to make reparation and meet the legal obligation of ‘net zero’ this government signed up to than to pay the subsidies disappearing here in the UK to poorer emerging economies abroad, to grow and supply us with affordable food?

It’s a win win for our government, in more ways than one.

This is not the the fault of our farmers, but rather our governments and those civil servants charged with finding solutions to government agendas including meeting housing targets (replacing farmland with housing).

The government don't want us to produce our own food. We as the population NEED our British farmers to farm, right here in the UK.

There IS business relief for IHT so assuming the conditions were met so in your example, they wouldn't be paying IHT on £580k.

Gifting all or part of a business to a son would trigger capital gains tax on the deemed market value is it's a transaction between connected parties!

I don't know any other industry that requires such a disproportionate amount of working capital in assets to create such a small amount of profit.

I was infuriated listening to James O Brien on LBC ignorantly goading a farmer telling him to sell some land to cover IHT.

It's not easy to just sell a few acres. Anyone buying land needs access to it and a neighbouring farm of ours wanted to sell some land not so long ago. In short it was all or nothing as they didn't have a section of land with another roadside access that they could sell.

Because of the large figures involved people who haven't looked into this feel no sympathy for farmers and don't understand it means so many farms will go under.

All the farms around here are big businesses with multiple properties (some rented, some holiday lets). The farmers here here live in extremely expensive houses, drive expensive cars and send their kids to private schools. I’m not sure why they shouldn’t shoulder some of the tax burden- it won’t be as much as as other business owners but it does seem fairer 🤷‍♀️

On £2m he will owe £200,000 based on the suggested rules. That's 20 acres out of 200. Why is 90% of the farm not sufficient?

I've just found out they also take tax for all the equipment for farming too! It all gets added up and taxed. Not just what the land and house is worth.

Seems a bit short sighted for smaller farms that are farms and not stately homes pretending to be farms

Before the budget JC came out to in an interview to say he gobbled up the farming land to avoid inheritance tax!

If the farmers really want to get the public on side don't let Clarkson, Farage and Reece Mogg be your mouth pieces!