The Chancellor will not have talks with farmers, why not ?
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Some very wealthy people - not ‘real’ farmers - are using the exemption as an IHT loophole, but out the baby goes with the bathwater if the new legislation is used as a blunt instrument to cosh truly real farmers. Separate the two… Wake up before tsrhtf farmers will get militant and bring the country/government down.
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Yes, accountability, we seem to be entering stand up and be counted.
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Labour will face consequence.
I The NFU chief suggested there is division within the cabinet over the tractor tax, claiming that Rachel Reeves has entirely “refused to engage” with farmers on the policy.
Asked by The Independent whether he believes there is a disconnect between the Department for Environment, Food and Rural Affairs (Defra) and the Treasury, he said: “The very fact that we’re even arguing about the figures suggests that the foundations of this policy are very weak.
“We know that Defra figures show something very different to Treasury figures. Treasury are obviously working off historic claims.”
After meeting with Mr Reed on Monday night, he said it was clear that Defra was “not consulted” about the policy.
“There’s probably some very interesting conversations going on behind closed doors that we’re not privy to”, he added.
Treasury data shows that around three-quarters of farmers will pay nothing in inheritance tax as a result of the controversial changes.
But farmers have challenged the figures, pointing instead to data from Defra, which suggests 66 per cent of farm businesses are worth more than the £1m threshold at which inheritance tax will now need to be paid.
Not for a few years.
We can only wait and see what next year brings.
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Thank you, C. This helps answer a lot of the questions I have, especially the different valuations between the farm and farm and farm business.
With the cost of livestock, farming equipment (presuming it is owned outright), and farm shops (building and inventory) £1m seems like a very low threshold.
It’s not 1m, husband and wife have 1.5 m each before inheritance tax, is paid, so a combined sum of 3m before tax is due…
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Aren’t most of the assets tied up though? What is the income on these farms? What’s the profit/land value ratio?
High time too. “REFORM” The Word.Not the Party
Has attracted.Well Informed Constructive and Influential Whistle-blowers. And media sources. Such as TV Ch 4.
Researched, Tirelessly pursued and Publicaly exposed.
[ CofE exposure, a classic example]
A Momentum without fear of personal consequence’s.
The stimuli of our current Parliament. Laid bare in the previous. >>
Slowly slowly Catchee Monkeys.= Reform. ie. Ancient Hereditary Entitlement.
The more I look into this inheritance tax on land issue, the more it looks like the rich and well-connected concocting a claim that this tax will destroy British farming. The average farm size is well below the threshold value. So only about a third or even a quarter of owned farms are big enough to be affected. Then, only 54% of farms are farmed by the owner. The rest of farm land is farmed by tenant farmers - they certainly won’t be affected. Plus these larger farms are most often set up as limited companies, with all of the family being directors. The very large farms are mostly owned and run by large companies.
So the issue is only a slap of reality for a very, very small number of land owning farmers who are already wealthy. The rest of farmers and farms will not be affected at all. This is not a crisis for British farming.
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That looks like the standard labour politician’s answer to the questions.
It will affect tenant farmers if the land is withdrawn from access or the cost of the land tenanted goes up in price as a result of the impact on the rich landowners. If those rich landowners are not affected because of their excellent tax planning then there isn’t going to be much point in doing this anyway. There will doubtless be a % of farmers that are sitting on land that is worth more than £3m and are barely scraping by. Labour have been unable to confirm the number of “scraping by” farms affected. A % keeps being quoted. The labour MP on question time argued that they can tax plan, but again that makes it very pointless to introduce.
I can understand that they want to go head to head with the rich landowners who badge their £m’s as farmland when it isn’t but that is a group that they are least likely to impact.
There’s quite a bit of counting chickens before they hatch in the financial assumptions of how this will work and the long term benefits to the treasury.
40% of land sales went to non-farmers last year. This is a tax dodging loophole that needed closing. And the demand for land, driven by this tax dodge, has pushed up the price of land. So the claim that tenant farmers will be negatively impacted is wrong. Its more likely to work the other way.
I’m no Labour politician but I detest tax avoidance schemes of any sort that are only available to the very rich. These shift the burden of taxes onto those in the middle income levels, who aren’t the supported poorer people, nor the privileged tax avoiding rich. Spread the joy of getting to pay full tax.
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How will this work the other way? If those super rich individuals tax-plan their way out of paying tax on the 40% or sell up that land to big farming companies removing access to tenant farmers? Or they pass extra costs of the tax impact to the tenant farmers. You haven’t addressed these points. I’m not clear on how this won’t negatively impact poorer farmers in one way or another. Those struggling farms that are just over the threshold may sell up land which will end up property-developed. Either way this is a lose:lose for food security.
I’m not sure I follow your logic. You seem to be conflating some conjecture on what land owners will do now the tax benefit has gone with more conjecture on how those being taxed on inheritance will decide to pay that tax.
The likely effect of this closed loop hole will be a reduced demand for land, which in turn will reduce land prices. It is likely it will also make more land available. So land available for lower prices - which can be bought by would be owner-farmers who have thus far been priced out of the market. Or for small farms to increase their size and productivity Yes, the land could be bought by massive farming companies or energy companies seeking places for wind/solar farms. But that is the case today. And these two potential buyers are more likely to afford high prices than a tenant farmer seeking his/her first owned farm. I really can’t see how this creates a sudden negative impact on smaller, less wealthy farmers.
The issue of how wealthy land owners will pay for a tax in the event of an inheritance seems, again to more likely benefit small farms and tenant farms. Hiking up tenant rents will not pay a tax bill of hundreds of thousands. More likely selling off land will. And as more land will come onto the market, average tenant rent levels will more likely come down. A surplus of land and farms will not create a rise in prices - either for purchase or rent.
You say that I’ve not addressed the points you raise. I had not (but have now) because I did not consider the false premise on which you are basing your fears. Namely that more land coming available would push up prices or mean only large farming companies will be the buyer. Both ideas are flawed.
if portfolios are consolidated by large farming companies or wind/solar farms as you suggest when wealthy landowners sell off swathes of land in response to this change, how will that not affect the smallholdings that just about survive and may be relying on the tenancies to remain stable? There’s no guarantee that these large companies will give a hoot about existing tenancies. There’s also no way that such tenancies are suddenly going to afford to buy farmland that has miraculously overnight fallen to such a value that they can do so. It takes a great deal of investment and hard work over generations to build up a decent sized farm. It’s highly likely that investors will be from overseas and they won’t be interested in our food security in the long term.
It may well be that many areas thus far used as farmland will withdraw from that sector leading to inflation of prices of farms that do remain. Moving them over the threshold.
Anyone thinking of going into farming won’t be going for a larger investment which may in the long term hit inheritance thresholds. Anyone below this threshold is not likely to be making much of a profit but may end up pushed into the threshold over time because as we well know governments aren’t too keen on increasing threshold year on year in their stealth tax grabs.
No, you suggested that, not me.
Because land is over-priced. Taking tax dodgers out of the buying pool will reduce land prices and make the task of creating a decent sized farm that bit easier.
Why do think it highly likely? You’ve just noted that many farms scape by. So why would this be such a good investment for overseas buyers?
At today’s land prices you’d need a farm a lot bigger than 200 acres to hit the threshold. Which is a big farm. If land prices go down, as seems likely, then that will be a larger farm. And in any case the tax is half the normal inheritance tax, with a ten year payment spread.
But the main point is closing off this tax avoidance loophole that already rich people have ben taking advantage of. A good start but there’s a lot more similar to tackle.
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At the moment it might be 200 acres in the future it might be far less. We know full well, governments aren’t keen on raising tax thresholds once set. Those expanding now will eventually be caught in the trap because it is very unusual for land to depreciate in value.
I’m astonished at your confidence and satisfaction with the idea that land prices will fall. Such a sudden fluctuation is not a good thing for our economic stability. The whole idea that this will lead to a flurry of land sales and farming business restructure is a disaster for our food security. The cost of land and investment in UK farming are just as connected to our economic welfare as any other service sector. You do not meddle with that in such a cavalier and headstrong fashion as the current government has meddled. You phase something like this in gradually and give some sort of taper reliefs over say 5-10 years. It just shows the lack of experience and naivety of the new administration.
Overseas buyers will eat up the desperation of any offloading of land and then may well sit on it waiting for appreciation, happily exempt from most of our taxation regimes because they are not located here. International organisations are always happy to buy up our land and buildings when there is a financial shock here. Why wouldn’t they be? It just short chargers the farmers who have built up and cultivated these lands for so long. A slap in the face for many voters.
Anyway I’ve said that as land that may be used for farming leaves the market, the farms that still exist will appreciate in value and go over the threshold . It all seems to be economic policy on the hoof without any real plan. Reminds me of brexit tbh
We both seem to astonish each other.
My confidence that farm land prices will fall is based on very simple economics. Adam Smith and all that. The fall in demand (40%+ of sales have been specifically to avoid tax and that will reduce greatly) and the likely increase in supply (some existing land purchases held for tax purposes may be sold) can only lead to a fall in prices. This is needed. Good cereal land is selling for £15k plus an acre. An acre of wheat likely makes £200 per harvest (after costs). That is not good business. Just that fact is bad for food security. If farm land is being increasingly used for things other than farming then this is the reason. Its basic agricultural economics that are the threat to food security, not inheritance tax. A reduction to farm land prices would be welcomed by the farming community (and disliked by people who bought speculatively).
My other astonishment is your obsession with overseas buyers. The pound has risen about 10% in the last year. That is more likely to discourage overseas buyers - or rather, the hugely under-valued pound when it was kicking around at 1.10/1.12 to the euro was more likely to encourage overseas buyers.
Was that the reference to Brexit you hinted at?