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?

@MissJoGrant
Ok so where is he getting £60k a year from? Creaming it off profits or selling things he has no use for?

Well we had to take out a loan to pay IHT on my dad’s estate. It hurt like Hell selling so much of what my father built up but he had a view that people have to pay tax. He had previously sold his business so it was mostly invested in other things. But that’s the thing - he sold his interest in the business because he needed to make things easier for tax reasons.

My father was born in a workhouse. People who have had farms for generations have no idea how it feels when your parents made money despite having lived in a workhouse and come from nothing but half they own has to be sold to pay IHT . Yes we had to see almost half of what he owned sold to pay the government. All it means is that other people will buy the land and farm it - it will get farmed.

@Noras wouldn't’ his business have fallen within business IHT relief?

@Noras it won't get farmed. This policy will put off anyone wanting to farm. The land will be developed.

Eh??? You’ve literally just read some propaganda from the bloody Labour Party in that post not some well-considered objective analysis.

it’s a corporate land grab. The Labour Party are a disgrace.

@SwordToFlamethrower totally! When Mogg is fighting the good cause, you know it's something that's getting the rich elite's knickers in a twist! Also, something for the right-wing press to get their teeth into!

Yes I am in agreement.
A lot of small farms will have to be broken up so land can be sold in order for IT to be paid.
Farming land will be lost as I'm sure a lot of sales will go to new housing development etc.
if a farm is inherited and the person who has inherited continues to farm the land then they should be exempt.
If they inherit the farm and sell it off to make millions then I think they should have to pay IT then.

I think this has been very badly done by Labour. I think that if a farm is being passed on to the next generation TO FARM for at least X years AND be producing something the country needs, then those inheriting should not need to find IHT cash. If the farm is sold, IHT becomes due. Not all offspring of farmers work on the farm, in such cases full IHT should be paid. To support all this, to be a farm you would need a licence or something that accredits the fact that you are a genuine commercial agricultural business not a hobby farm or such. I’m just sure a better and fairer solution was there, that can still clobber people who just buy up land for tax saving, but considers food security for the uk as well.

Yes, I'd say he should be "creaming it off the profits" off a £5 million farm. That's way more than double the average value of a farm. Then you've effectively paid £600k for £5m worth of assets that you didn't actually earn yourself, which seems like a good deal to anyone who doesn't expect to have a £5m farm simply fall into their laps when their parents pass away.

Just that most farmers will sit down with an accountant every year to discuss their accounts. Most will also have a discussion about the direction of the business and tax planning which would include IHT. For the last 10 of those when I have sat with my Mum and Dad in those meeting the land agents and accountants have advised not to gift. I
guess the reasons were:

1. it’s expensive. My husbands family is now about to do it. We will be paying solicitors fees, land agents fees and accountant fees. I’ll be surprised if there’s change from 10k.

2. there is an inherent risk when you gift that the child will divorce and the partner go for a share in the assets. Every farmer I know has a horror story of a divorce meaning a farm sale.

3. to ensure it’s not a gift with reservation you can’t benefit from it. There are ways round this eg be paid for the work you do, pay a rent or move out of the farmhouse. Small farms cannot afford this. I suspect this is behind a lot of the angry feeling in the farming community about this. However, I would argue if the farm can’t afford to pay its workers the NMW or for a small house in retirement then it’s not a viable business.

What if you have a farmer without children or children who want to do something other than farning? There seems to be this acceptance that farmer's children will automatically wish to own and manage a farm and is this a bit archaic? Inheritance tax will bring in much needed tax revenue and open up the opportunity of farming to other groups of people or land companies. In all other branches of society we do not expect children to exactly follow their parents footsteps and also for any other job such a practice as in farming would be branded as neopitism.

Also you have the normal inheritance rules for more than one child with the estate being split any way with multiple children. Children who may well their share in farmland for millions without tax implicarions.

Sorry not buying it.

Incidentally I knew farmers children for. The 80s who routinely missed school to help our at the farm whose parents didn't give a shot about education because their kids had one role in life in their eyes, farning, and lambing was more important than history or maths. Both children turned out four and insular in their outlook which an over fixation on farming as the be all and end all. Massive farmhouse though and they ended selling land for developers so that could live in style today.....

Other family businesses can be the same where it is assumed the next generation will take it on. There was also IHT relief for this too

Can't farmers just pass down their farms when they are younger to (hopefully) avoid the IHT? I am totally on the fence and just trying to learn more about the issue.

There is still IHT for business and so farmers should not be entirely exempt.

I think there is a slightly controlling aspect of expecting your children to take over the family business and grooming them for this? It does seem very insular in a modern soxiety. Are farmer's children who wish to do other things with their lives looked on as family disappointments especially if they intend to sell their farms?

Family dynasty in this way smacks to me of something for another era. As I said maybe the IHT may have a side effect of farmer's children looking at their life choices in a broader sense without an overwhelming sense of obligation to go into a profession which judging by some one this thread is arduous and low paid.

@sunandfog could you afford to pass your house and income to younger generation for nothing (and pay some hefty professional fees in the process) and then be able to afford to live somewhere else?

This is a truly silly argument. Being over dramatic about such things makes you sound ignorant and detracts from the issues.
In order to achieve net zero less land than is currently used for golf courses is required. This doesn't have to be in only fields it can be on roofs, brown field sites etc. Fields with Wind turbines in can be used for livestock and crops.

But aren't they already living on the farm? I assumed they would be.

It’s relatively cheap to pay for life insurance to cover any IHT bill.

All this means is that farms have to plan a bit more. And surely they’ve been campaigning for better prices at the farm gate for years? We can’t have Schrodinger’s Farms which are simultaneously so unproductive as to barely turn a profit but yet be worth millions for inheritance tax purposes.

And wasn’t APR only introduced in the 1990s? So it’s not been around for that long.

@Moonlightstars if you gift the farm you can’t still live there or get any benefit from it unless you pay market rent

Oh that makes sense. That's tough then.

A lot of farms don't earn enough to pay the IHT back in cash, even over 10 years.

My partners farm makes ~50k/year profit. That then has to pay for him, his brother, his elderly father and elderly uncle. It also provides savings for re-investments of multi year projects. If this money has to stretch to paying back IHT over 10years then everyone would taken even less earnings and those projects that are improvements for the environment and animal welfare won't happen. At the moment a lot of this money is being ploughed into a new slurry pit, to hold 6 months worth of slurry storage which will help to improve water quality and reduce fertiliser use(bad for environment)

If FIL gifts the farm then he would have to pay rent on the house he lives in. He's 75 he has the state pension but that is it. He would also have to live until 82 to avoid IHT.

IHT has been another version of a subsidy that farmers receive. Removing it so brutally will have impacts on farming and food security. The subsidies exist to keep food prices low, you remove than farmers will have to be paid more and the price of food in the supermarket will increased.

At the moment we provide enough milk for 14500 people per week. I don't know how far the beef we produces goes it's too early for that maths. At the moment we are trying to work out how we can afford to maintain a viable farm and pay IHT. Its seeming unlikely at the moment, we are a small farm.

Yes people should pay tax, but it has to be affordable and in this case mean the nation can be fed.

I would support it if the threshold was higher to actually mean that small family farms and protected. RR is misleading the public.

@crumblingschools

Thanks for your reply. My personal circumstances are irrelevant I think - but yes I could. Lots of people downsize and pass on their wealth in their fifties/sixties to try and safely avoid IHT and to help the younger generations.

Is the point that because the income on 'true' farms is low that the older generations simply can't afford to find somewhere alternative to live when they pass on the farm? I live rurally and most of the farms around me have 2 or 3 generations housed within the farm but perhaps that is rare!

@sunandfog so if you downsize would you simply pass the house to an adult child or would you sell it freeing up cash?

If a farmer is to gift the farm to younger generation they don’t get any money for it and they can’t carry on living there unless they pay market rent.

Many farmers are cash poor and asset rich.

The farmers who have money will likely have diversified (so those bits of the business may not fall within this IHT relief anyway) or have sold off some land for development.

Jeremy Clarkson is an obnoxious man but his Farm programme highlighted how little money is made selling crops and livestock. So a generational farmer may seem rich having a farm worth in excess of £2m but most of these farms give very little return to the farming family. We should be grateful they are still happy to farm to provide food for us.

Just setting the record straight here. Farming IS treated like “any other business”. Business property relief provided (pre this budget) 100% relief on traded assets. It didn’t generally include land rich businesses (its complicated) so APR was brought in so that farmers would count as a business. This also means that you can’t hold a farm as an investment and get APR unless you actually farm it.

The recent budget cut both. This is a raid on ALL family businesses. Many will now see the business broken up or be dissolved as the next generation won’t be able to afford to pay the tax without breaking up or selling parts of the business. This is generally just terrible economics.

Farmers have a particular angle on this because there are a lot of family businesses and because food security is everyone’s business, plus, as they point out, they are particularly asset rich and income poor. But this is a raid on the family business, in general.

Yup, that's exactly how it should work and the government could have changed the rules to that effect. But, let's be realistic here, the change is nothing to do with raising tax revenue, it's just the politics of envy in the same way as VAT on private school fees which likewise will produce no additional revenue. It really is time we had some grown up politicians.